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Wealth Is What You Don't Spend

Financial wellbeing

Financial wellbeing can't be measured by only focusing on how much you earn. The gap between what you earn and what you spend is an important figure.

Household savings fell by 30% during a period when median real income rose 40%. Even though Americans earn more than ever before, they have been offset with higher spending.

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Wealth Is What You Don't Spend

Wealth Is What You Don't Spend

https://www.collaborativefund.com/blog/gains/

collaborativefund.com

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Key Ideas

Financial wellbeing

Financial wellbeing can't be measured by only focusing on how much you earn. The gap between what you earn and what you spend is an important figure.

Household savings fell by 30% during a period when median real income rose 40%. Even though Americans earn more than ever before, they have been offset with higher spending.

Temptation to spend

It is tempting to spend more when your income rises. But savings rely on the ability to receive an extra dollar and say: "I can spend this money, but I'm not going to."

Leave your gains alone

Earning more will do little for building wealth if every extra dollar is offset by a dollar of new spending.

Wealth has less to do with your gains and more to do with your ability to leave gains alone without cashing them in.

Live with less

  • Learn to live with less contently is easier and more in your control. It has the same effect as growing your income.
  • Money has a lot to do with the actions you don’t take. Everything has a price, and prices aren’t always understood.
  • The price of building wealth isn’t just earning money; it’s avoiding the post-earnings urge to spend what you’ve accumulated.

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SIMILAR ARTICLES & IDEAS:

Saving money

Saving money

Everybody wants to start saving money as soon as possible. However, quite few people actually do it. This is because saving money implies giving up on the immediate joy that one could feel when pur...

Keep your money in different accounts

To be able to actually save money on a regular basis, you should first make sure that you cannot touch the money that is intended to be saved. 

Ensure this is by keeping your money in two different accounts: a  checking and a savings one. The accounts should be at different banks, making it more difficult to transfer the money from the savings account to the normal one whenever you feel like buying something that is not really needed.

Change your focus when saving money

Whenever you try to save money, try focusing on the process itself rather than the final goal. For instance, telling yourself that this is a temporary situation might prove extremely useful and help the time pass faster.

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Many life transitions happen in your 30's

From moving up in your career to buying a home. Making smart moves with your money during your 30's can help you achieve future financial success.

Focus on percentage of income saved, not the dollar amount

Over the long term, it's not as much about the dollar amount you save, but the percentage of your income that you dedicate to saving and investing. By focusing on percentages, you can ensure you're always saving more as you earn more. 

Spend time tracking your money

Most people react to their finances. The problem with that is that you rely on chance to have enough money in the bank when you actually need it. Be intentional about your money and spend time reviewing and evaluating it. If you don't, you'll never know if you're moving in the right direction or not.

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Increase Your Income

Formal education, practical experience in your field and doing a good job is important to earn a high income.

Most professionals see their incomes increase over time. If you can gain high ear...

Save and Invest

You’ll only build wealth if you save a reasonable percentage of those earnings.

  • If your employer offers a 401(k) plan, increase your contribution.
  • Automatically send a portion of your money to your savings or investment accounts before you can spend it.
  • Purchase a home instead of renting. You'll get your house payments back in the form of equity.
  • Pay off anything you owe to avoid paying interest.
  • Maximize the interest earned on your savings.

Cut Wasteful Spending

Periodically evaluate your spending and look for sources of savings.

  • Invest in more sustainable technology for your home. For instance, if you watch cable, buy only the channels you are watching.
  • Improve the insulation of your home to reduce the amount you are spending on electricity and gas.
  • Consider buying in bulk.