If you had the chance to earn up to several million dollars, you would probably do everything you could to keep as much of that money as possible.
Most of us do earn that sort of money over our working lifetime. But many of us could keep more if we followed some simple techniques to reduce spending.
One key is to minimize your variable expenses through reducing their frequency.
For example, if you shop twice a week for groceries, you are more likely to spend more than if you shop only once a week – and spend quite a bit more if you go shopping when you are hungry rather than on a full stomach.
You know if you shop at a big box or regular department store twice a month you will probably spend more that month than if you shop there only once. Or if you go to a coffee shop five times a week instead of twice.
Here are some other effective ways to keep more of the several million dollars you earn over your lifetime:
- Have a fixed amount automatically transferred every payday (or week or month) to your savings/investment plan (like the Canada Savings Bond payroll savings program) and live on what’s left. You can’t spend money you don’t have – unless you use credit (see next point).
- If you don’t pay off your credit card(s) in full every month, consider living on ATM cash withdrawals which at least show you how much money you have left.
- This is my favourite: Once a debt is repaid, add that payment to reduce the next most expensive debt. And when all debts are repaid, continue to have at least some if not all of that snowballed payment automatically “paid” into your savings/investment program.
- As you would in a business, keep receipts for every dollar you spend for a couple of months. List the expenses in order of priority and trim accordingly.
Mike Grenby is a columnist and independent personal financial adviser; he’ll answer questions in this column as space allows but cannot reply personally. Email [email protected]
