The Best Money Blog

The Number One Way Not To Get Rich

Buy everything you want. That’s it, that’s the secret. It seems obvious, but the more you look at it, the more you’ll realize that you do it every day.

See that laptop over there? Charge it, you’ll pay it off eventually.

See those new designer shoes? It’s buy one get one half off right?

You might as well get the extra large drink, after all, it’s only $1 more.

Moderation Isn’t Only For Drinkers

For most middle class folks who work a 9-5 job for the better part of their lives, there are fewer options when it comes to saving money. This post is for the curious few looking for a way to get out of the rat race that most people call the American dream.

One essential difference between the rich, or even moderately wealthy, and the average Joe is in the way they spend their money. Part of that includes differentiation between wants and needs and the ability to restrain yourself from the impulse to purchase the things you want.

Wants vs. Needs

Below is a list of what many people consider needs, and reasons why they really aren’t:

1. Cell phone. In certain circumstances, a cell phone may very well be a necessity. Personal cell phones, however, are not. Does your 13-year-old daughter really need that 500 minute plan with unlimited texting and data? How do you think people got a hold of each other before the cell phone was invented?

2. Cable Internet. This is another controversial item because a lot of business can’t be run without a connection to the Internet. If you are a light Internet user you could always use free WiFi hotspots at nearby cafes or ask a neighbor if you could bum some bandwidth from their wireless connection for a small fee or even free. If you are about to lose your home due to delinquent payments, or just want to maximize your saving potential , you might consider moving from a $30-$60 a month high speed connection to a $10 or potentially free dialup connection.

3. Cable TV. This is something I just recently canceled myself. The average American spends four hours a day watching TV, and I can guarantee that most everything they watch is unproductive. Cancel your cable and save yourself time and money. Get something done around the house or spend some time with friends and family outdoors.

4. Air Conditioning. Depending on where you live, heating and cooling can be considered a want. Sure, if you absolutely cannot sweat in the summer or put on sweats in the winter, air conditioning would be a necessity, but in many climates it is 100% for comfort.

5. Clothes. Obviously you need clothes to go out into public, but do you need a $200 pair of designer jeans. I have a friend who recently spent $125 on jeans because they were marked down from $250. Isn’t 50% off a good deal? No, no it isn’t. I bought my jeans at full price and spent $120, the only difference is that I came home with six pairs instead of one, and no, I don’t look like a homeless, former construction worker in them either.

I chose these controversial items to illustrate the point that the line between wants and needs is not black and white and it’s where you lay within the gray continuum that will enable you save the most.

Distinguishing Your Desires

If you are looking for a way to curb your spending and save for a better future, there are some simple questions you can ask yourself.

• Can I physically live without this? Although you may want to super size your next fast food meal, will the extra 10 fries and 20 ounces of soda keep you from physically withering away. No, and in a case like this, you would actually benefit from depriving your body of the extra calories.
• Will buying this cost or make me money in the long run? One obvious product I can think of that has easily paid for itself is my laptop. It is not a need, but it is also not costing me anything overall. In fact, it is aiding me in acquiring even more money. This is another step in deciding which wants are good wants. Do you need a $2,000 ultra-slim computer with 10 hours of battery life, or would having an $800 mid range laptop that is just as capable of surfing the internet and checking e-mails work just as well? That is for you to decide.
• What is something more productive I can spend this money on? This is a good question to ask when you catch yourself before making an impulse purchase. Should you buy that new pair of shoes because it’s on sale this week only? Or should you put that money towards paying off your debt or into a savings or investment account. When I find myself about to buy something I can afford but don’t need, I will put 20% of the cost of that item into my savings account or towards paying off my house faster. I won’t miss the money and am effectively earning interest because I will pay off my loan faster.

Consistency Will Give You Results

Anyone can say no to themselves once, maybe even for a whole week. The thing you have to keep in mind is that this isn’t a onetime thing. It’s a lifestyle change that takes practice. You may slip up here and there, and if you give up the first time you make a mistake then you will continue living the way you do now, wishing you had more money saved up for your future or to put towards that catering business you’ve always dreamed of running.

By consciously making the decision to save rather than spend, you will begin to accrue more money than you ever thought possible.

What are some things you have a hard time saying no to? If this article inspired you, take a second and Digg or Stumble it below.