How to Build Up Wealth Through Frugal Living
My Biggest Secret for Saving Money
I am sharing this anecdote to illustrate my big secret for saving money. If you haven't guessed it by now, the big secret is by living frugally.
How to save money by living frugally.
There are all sorts of tips, tricks, and secrets for saving money and I am sure you have read them all. However, living frugally goes beyond watching your money, it means controlling your spending by not living flamboyantly and doing as much as possible for yourself. By living frugally, my husband and I have managed to accumulate a nice little retirement portfolio which includes a smattering of real estate holdings, stocks, CDs, bonds, a collection of art work, IRAs and a 401K, and a pension from my husband's place of employment.
Some of the ways we save or money are very common sense tips that anyone can do. These include:
* Living in a modest sized house in an older neighborhood
* Driving older cars
* Having a vegetable garden, canning produce, and cooking from scratch
* Never eating out, seeing movies at the second run theater, taking advantage of free local entertainment instead of pricey venues
* Wearing out clothes instead of buying new every season
* DIY yard work and lawn care
* DIY repairs on the house and car
* Buying second hand furniture or refinishing existing furniture instead of buying new
* Cutting your family's hair
* Watching utility use
* Making your own toys & clothes for the kids
These are just a few ways how we save money by not spending. While on the surface this may seem a bit austere, this is actually how the average American used to live up until 40 years ago. They understood that living frugally now meant financial security for the future.
Building your savings.
All this saving money doesn't do a bit of good without some sort of savings plan. My end-of-the month strategy is to plow the money we saved that month into a money market fund for the short term. Once enough cash has saved up, the funds are invested into something that yields a higher return. If you don't have the discipline it takes to deposit extra money into a savings account, other strategies include:
* Having a percentage of your paycheck deposited into a savings account every payday
* Earmarking a specific income stream for savings, for example, depositing all your eBay income or rental income in savings
* Upping the percentage of your retirement withholding
* Claiming "0" on your W-4 and then converting your federal refund check into stocks or CDs
* Buying a $25 savings bond every time you cash your paycheck
When it comes to getting rich, the one big secret is all in how you watch your spending so as to free up more money for savings. Aside from marrying into money, a frugal lifestyle is the easiest way to ensure your financial security for the future.
Published by C. Jeanne Heida - Featured Contributor in Business & Finance
Jeanne is a small business owner with 25 years experience in the real estate industry. A consistent Y!CN Top 100 writer, her articles can be found at Y!Finance, Shine, Your Wisdom, DEX, and the Scripps Net... View profile
- The one big secret for saving money and growing in wealth
39 Comments
Post a CommentSomeone said to save in a Roth IRA, I know this sounds stupid but I have never had money to save until this past year and when I got a second job and was able to save $5000 by being frugal. Does anyone know of a good place to get a Roth Ira that pays good. The one my bank has does not pay anything worth your trouble. I am not a smart person when it comes to investing, never had the cash to do so. BTW I am 62 yrs old and never had a job until two years ago so I do not have any retirement to fall back on.
And billionaire JR Simplot of Idaho only had an 8th grade education ~ but that doesn't mean that we should all drop out of middle school on the off chance that perhaps we'll invent something. With 65% of Americans having less than $25,000 in assets and cash, watching the pennies is a habit worth cultivating.
Did Warren Buffet, Bill Gates, and Mark Zuckerburg become wealthy because they saved money or earned money? What if you spent the time you would have spent on DYI projects, growing a vegetable garden, always cooking from scratch, and making your children toys on earning more money?
john...........SAVINGS BONDS DO NOT DOUBLE IN 5 YEARS!!!!!!!!!!!!!!!!!!!Presently they pay .0072%. $100.00 BOND BOUGHT 5 YEARS AGO IS WORTH APPROX. $19.00.
All good, but there are other ways to save.
1) budget yourself to $10 per day and at the end of the day putting what is left over into a jar until you have enough to buy a savings bond...savings bonds mature in 5 years at doulbe the price you paid...that works out to 100% over 5 years divided by 5 = 20% per average..beats the banks measily 1.5%.
2) take 1/2 of the left over money from your daily budget andput in 1 jar for savings bonds and the other 1/2 into a jar for splurging every30 days for a nice dinner or movie or little get away. It is like a reward for doing good...
3) OR you can split that second 1/2 in 2 and save for splurging and the other part for an emergency fund
There are other little known ways to save money by cutting back on expenses.
Super tips!
All interesting savings tips but I prefer not to use the federal government as my saving account with 0% return. Instead I try to claim the right amount of deductions and invest those extra dollars each month into my ROTH.
Wow! I loved the article! Someone who's saving and penny pinching and its working for them. And even better, they are offering they're tried and true ways to everyone else for FREE!
Whats amazing to me is the negativity from a few towards this person. Really? Is it necessary? Oddly enough I read your negative comments but didn't notice you offering up any suggestions to help.
I'm struggling my self, as many people are today, and haven't figured out what to do to better my finances. So these articles, writtten by everyday people really do help people like me.
If it doesn't help you, just don't read the rest and move on and let people like me and the others who enjoyed this article really enjoy it.
Thank you Jeanne for your information and keep on writing and helping people like me. I appreciate it.
Good tips! I'm not sure what all the snark and criticsm in the comments is about though. Every tip won't apply to every situation, so take what applies and let the rest fly. This person is not claiming to offer a personalized financial plan. If you want one of those, you'll need to pay someone.
Also, the goal of saving $5000 is not a reason not to take their advice. Everyone is not rich but they do have to start somewhere. That is not a lot of cash on hand but if it is more than they had, it is a worthwhile goal. I see this as the kind of practical advice that people with limited assets need to begin to build something so they can move on to more substantial financial planning. I can't afford to do any worthwhile investing at this point but I can shop at a thrift store versus buying new and sock that money away.
Also, the same article says that over the past year they have completely eliminated credit card and other consumer debt. Could that be why th
what about inflation???? and the white house spending money every wednesday in parties....hahaha