I wrote before about luck, but this post is more about how to become more wealthy. Which some people would agree is related to luck.
The basic way to increase wealth is to either reduce costs, or increase income, and then do both.
Today I will provide some steps to reduce costs.
Step 1. Get a bank transcript for the last 60 days of transactions on your account.
Step 2. Identify which are recurring costs, and which are random transactions by highlighting your recurring costs with a pen or marker.
Step 3. Strike out all transactions that is not necessary to support your life. Let your house, phone bills, food etc stay but strike out everything not necessary. If you see a transaction for a trip to the grocery where you know you bought useless crap, never mind that for now. also strike our any recurring bills for subscriptions etc that you dont really need to survive or work.
Step 4. Add up all the numbers for your montly living cost, having only the most neccessary numbers, dividing the last 60 days in two so you get a montly average.
Step 5. Subtract this sum from your total sum and see how much you could save – it all depends on how much comfort and habits you are willing to reduce – in order to spend that money on what helps your real goals and objectives. You could tend to buy stuff you think you need but in reality may be wrong in the big picture, or a resource not being properly exploited.
Consider hand soap. Buy 2 instead of one. Use up one. Once One bottle is empty, pour half of the full one into the empty one. Fill both up with water. Chanses are, you ADD water immediately after having soap on your hands anyway, and adding that water makes the soap as a resource last longer. Now when both bottles are empty, you just get a refill and immediately distribute half in each (can have each in separate location) and that is how you get the effect of two bottles for the price of one, although the soap is diluted it was going to be diluted anyway, doing it beforehand helps conserve soap, and still get your hands clean. The lesson here is not the money you save in a year (a small sum) but the fact that if you are mindful of everything you are doing, you can direct wealth to provide more things you need and thus get greater gains. Think, the last time you washed your hands, how much soap did you waste by putting your hands under the tap, and did you look, would you notice most of the soap dissappearing down the drain having never had contact with your skin.
If you apply mindfulness to small things, and change your process on how you do things and why, it all ads up to a big difference.
Do you buy processed food at €2 every day, like potato fries, when your dinner could easily be made using real potatoes but you buy a 10kg sac of potatoes for €1 that will last you for many weeks and spend the extra 10 seconds cutting potatoes into fries shape yourself?
The health benefits of buying natural food, in bulk, preparing it yourself, opens up a new world of possibilities and also adds up. You save cash and could steam potatoes one day, fry them or even make your own potato chips.
The key again is mindfullness, being aware if you use potato a lot, and getting the resource and make it last longer, since a raw uprocessed food is cheaper than a processed one, without limiting your options, going back to bulk/raw food actually helps open up more possibilities.
Step 6. Pay all your recurring bills on the same date, every month. Make agreements with all current, and inform all future people and companies you do business with that from now on, you pay only on a certain date, preferrably you should choose two days after you get your salary. This helps in many ways:
– you have everything the same day, you can easily keep track of regular expenses (and more ready to cut unnecessary spending)
– people around you will notice how more accurate you control your economy.
– more easy to configure automatic payment in your online bank (so you never forget to pay rent)
Step 7. Never borrow out money without collateral.
Step 8. Save money in the bank. Avoid stock market. Buy gold.
Step 9. Sell stuff you dont need or havent used in over one year.
Step 10. Identify your resource consumption, be mindful, find ways to maximise use while procuring the resource at the lowest price per quantity.