There are two big camps in the world of making tons of money. You have your folks who suggest you save every penny you can whenever you can and that will be your road to riches and fortune, while others suggest that you must spend money to make money. I believe that both methods have merit, but you must know when you should use one instead of the other. Therefore, I am going to give you some of my quickest ways to wealth with these ideas in mind.
Having somewhere to live is expensive for all of us by a wide margin. In most places throughout the globe, you can easily spend around 30% of your income on housing alone. When I say housing, I am talking about mortgage or rent, any maintenance, insurance, utilities, or interest you have to pay. The scrimpers among us might suggest that you need to move to an area that has a low cost of living to save those pennies and unlock your income.
Slashing your cost of living helps but you need to think about the context of where you live. If you compare the cost of living the cheaper city to the more expensive city, say your cheaper city costs you $1000 a month and the more expensive city costs you $1750 a month for the same space. Depending on your occupation, you could see significant financial gains from living the more expensive city. You could be paid double what you get paid in the cheaper city, depending on the local job market in both.
So I think the best balance would be to find the cheapest area in an expensive city. Because you could earn $100,000 in the more expensive city instead of about $50,000 in the city you are in. In that cheaper city that $1000 is going to be about 28.5% of your income but if you go for the most expensive city it will be more like 28%. That half a per cent does not sound like much but that can be up to $312.50 more in your pocket. But if you could find a cheaper area in that expensive city you could save more.
Getting around is expensive, it is often the second-largest expense for most of us. It can easily cost around 18% of our total monthly budget just to get around.
This factors in car payments, fuel so the car will move, insurance and repairs. We all love having the freedom of a car, but you could save so much money. This makes even more sense if you live in a city that has fantastic transportation links. But even if you do not want to sell your car (which I would recommend you do) and replace it with a cheaper older one that is fuel-efficient.
You can always reduce the amount of driving you are doing. Try walking to more places that are not that far away and for trips that are far away, it would be smarter to use public transport. Then you will have plenty more time to read and do other things you might not usually have time in your day to do like listen to a podcast.
Together, housing and transportation consume around half of your average budget. If you think about it that way it is pretty insane not to try and reduce costs in those areas because that is where you will see the biggest savings. But if you really cannot make savings here, do not worry there are other things you can consider. But do not be afraid to spend more on your income on investments smart investments because that could net you more money in the future. If you are smart with other money you can increase investing to facilitate quick wealth gains.
Clothing can be a massive cost as well, health care, entertainment and food all rank highly within expenses. To reduce these, you just need to think less about style and what kind of impression it gives off to other people and more on your financial goals. There is no shame in buying second-hand clothes and they are often way cheaper and look just as good. Getting more creative with your cooking can save you a lot of cash as well. There are plenty of savings to be had for those who can put the effort in.
Ultimately, with a careful look at our expenses, we can all look to save a lot of money. Housing and transportation are two of the biggest financial sinkholes so make sure you are getting the best possible deal on those. But if you cannot do not ignore other opportunities to reduce spending do not forget to spend money when you need too though. Do not be afraid to take up an opportunity that will improve your ability to earn.