Financial tips like “skip your latte” are obnoxious. So are suggestions to camp rather than stay in hotels, separate two-ply toilet paper and cook eggs in the dishwasher. After all, I don’t want my life to suck. While it’s true that incremental expenditures add up over time, the biggest factors affecting spending have to do with central life choices.
The average “middle class” American making about $50k spends 30 percent of it on housing, 20 percent on transportation, 15 percent on food, 10 percent on retirement, 8 percent on utilities, and 7 percent on healthcare. These things aren’t elastic—you need it all—so the idea is to make efficient choices within these categories.
Get a housemate or two
Source: Santalucia
Getting a housemate can free up hundreds of dollars every month. Housemates help amplify your buying power so you can rent a nicer place in a better neighborhood while reducing utilities, all for less than living alone. Shared housing is one of the most effective cost-saving choices you can make.
Peace out, vehicle
Source: hiboox
After four years of relying on Boston’s subway, “The T,” I got a car. Having a car is freeing, but it shackles me in other ways. Now I spend $30 per week on gas to drive infrequently whereas my T-pass was $60 per month. I’ve doubled my transportation expenditures, city parking is super-expensive, and I’ve had to do maintenance every month I’ve owned it. Further, there is only one word to describe the future of oil: volatile. The ability of the price of gas to rise without warning is a freaky liability that only gets riskier with time. The less you can rely on a car, especially one fueled by oil, the more financial stability you have.
Don’t pay over 500 percent
Source: ineedafastmoneyloan
One way I cut down my expenses was by refusing to pay 500 percent more for anything than it would take me to make or get it myself. To implement this rule, guesstimate the cost of components of the target purchase. Example: an egg sandwich is probably 20 cents for eggs, 20 cents for cheese, 50 cents for a bagel, 50 cents for bacon, totaling $1.40 of actual cost. $1.40 x 5 = $7. If the egg sandwich costs more than this, it’s out. This way, small purchases stay in, but most meals are out. I’ve extended the 500 percent rule to other items; if I know I can get a shirt somewhere for $20, I won’t spend more than $20 x 5 for a similar item. I chose 500 percent to reflect my budget; ratchet the percentage up or down to address yours. After a year on the 500 percent rule, I now do the calculus automatically and don’t labor over spending decisions.
Stay healthy!
Source: MediBlurb
Focusing on personal health should be viewed as a totally financial choice. The lifestyle decisions we make as young adults set the stage for our health as we age. It’s important to be serious about the real, physiological threat of stress, poor nutrition, and a sedentary lifestyle. Being healthy not only minimizes near-term health care costs, but it keeps you able to work for as long as possible, and reduces the risk of chronic or terminal illness. When something really goes wrong in one’s body, the specialists required for a diagnosis can be expensive, and then there’s the cost of the treatment, time off work, side effects, related conditions, and increased future risk. Some studies blame half of all bankruptcies on health care costs. So get real about flossing, working out, and eating those leafy greens… these behaviors are investments on their own.
Original by Amelia Timbers
