Knowing how to save money is a crucial life skill that too many people lack. Statistics show that Americans tend to be heavily indebted with few savings, and while you don’t want to be a miser, below are some tips that will help you save money so you can live the life of your dreams.
Downsize Your Housing Costs
Rent and mortgage payments make up a huge portion of the monthly expenses for most people. The higher your housing costs, the harder it will be to save, and unfortunately, those that work minimum wage jobs have it the hardest. In extreme cases, you may need to relocate or get roommates for at least a few years to cut your costs to the point where you can amass a respectable amount of money.
Avoid Depreciating Assets
The worst mistake you can make, especially if you’re just starting out in life and not making a lot of money, is leasing to own a car. There are many people out there driving $100k automobiles that look “rich” with only $10k in savings and there are many driving $10k used cars that look “poor” but have $100k and beyond invested. Automobiles are depreciating assets that tend to lose value over time. By the time you’re done paying it off, it will be worth a fraction of the original retail price.
Get Out of Debt
Debt is for the lazy and undisciplined; prudent people always save, especially for major purchases. The problem with debt is that you have to pay interest which means you end up spending more than you would have spent by simply saving up for the item you want to buy. Plus when you’re in debt you’re always beholden to the lender which compromises your independence.
Get Yourself in Shape
Did you know that medical bills are a leading cause of bankruptcy in the United States? This shouldn’t be surprising, since healthcare costs have gone through the roof. A simple visit to a doctor can cost hundreds if not thousands of dollars, and those who’ve had to stay in the hospital even for a few days were often shocked to receive bills in the five figures. This is why it is so important to eat right, get in shape, and avoid going to the hospital unless you absolutely have to. Most people now have access to the internet which means it may be possible to self-diagnose and treat many minor to moderate issues with home remedies, and once you’re in shape you will rarely get sick.
Why Is Saving Money So Important?
While saving money is important, it will not build long term wealth. This is partly because the government is constantly inflating the money supply, which erodes the value of your savings, which means you must invest it in a manner that protects you from inflation while generating a positive return. The purpose of saving is to eventually invest it.