Million Man is about transforming yourself from a minion into a master. What is a minion? A minion is a follower, a slave, a yes-man, a lackey, a parasite. He has no backbone – he is controlled by others. He is a passive victim – life happens to him, he does not make life happen. A master is someone who is in control – he makes shit happen. He takes charge and takes responsibility for his successes, and his failures. He gets things done! In the world of money, high-value men transform their relationship with money - instead of being a slave to it and working for it, he makes money work for him. He does this by becoming a master saver and a master investor.
The formula for financial freedom and mastery is simple:
Earn – Spend = Invest
You want to earn more than you spend, and invest the surplus so that money works for you. The more you invest, the less you have to work. There are two ways to make this surplus grow – increase your earnings or decrease your spending. In this blog, we will look at 40 ways to become a champion saver and decrease your spending.
1) The 50/25/25 Goal
You want to spend 50% of your income on necessities. Necessities include the following: shelter, food, and toiletries (this includes pet needs), utilities (this includes water, lights, internet, etc.), transport expenses, debt payments, insurance, and medical needs. The remaining fifty percent is then divided evenly between non-essential expenses (such as entertainment) and savings. If you can save more and spend less on non-essentials, you will be able to invest more. Regardless of how you mix up the weighting of the fifty percent, you must not save less than 25 percent.
2) You Got to Keep it Separated
You need to set up a separate bank account for your savings. You do not what to mix your daily transactional accounts with your savings account – you will not have clarity on how much you are savings and you will be tempted into spending your savings!
3) Build an Emergency Fund
Set aside six months’ worth of living expenses in case of emergencies. This will help you to absorb financial shocks such as losing your job, or having to fix the heating in your house, without having to go into debt.
4) Track Your Spending
On a day-by-day basis, you want to know how your spending is evolving. Divide your spending into the following categories: rent, groceries, media (telephone, data, wifi, streaming subscriptions, etc), transport, entertainment, insurance, utilities (lights, water, rates, property taxes), etc.
5) Avoid Bad Debt
Not all debt is bad. What determines whether a debt is good or bad is how the proceeds of the debt are used. If you buy a Louis Vuitton bag and a trip to the Bahamas on your credit card, and then pay the minimum balance at the end of the month, that is bad debt. If you borrow money to invest, that is good debt.
6) Set Achievable Goals
Big long-term goals are good, but they needed to be broken down into small short-term actions. If you want to be a millionaire in 20 years, but you have no savings and you spend more than you earn, your first goal would be to balance your budget: income = spending. The second is to earn more than you spend and use the surplus to pay down your debt. Once you have paid down your debt, you need to maintain the monthly surplus and start to invest that surplus in the stock market.
7) Use the Cooling Off Rule
Before making a large purchase, think it through. I suggest a period of a couple of days to a week. Ask yourself if you need it. Is it a necessity (like a new washing machine) or a luxury (like another leather jacket)?
8) Think Twice About Taking Out a Mortgage
Mortgages are the single biggest obstacle to financial freedom. To make matters worse, most people believe their home is an asset. Robert Kiyosaki, in his book "Rich Dad, Poor Dad", says the asset/liability test is simple. Assets put money in your pocket. Liabilities take money out of your pocket. If you are living in a house, and it is mortgaged, you are paying rates, taxes, and interest on the loan. It is a liability. But property prices always go up. That is a fallacy. Real estate is like any asset – its price can rise or fall. If you are banking on your house price appreciating, then welcome to the world of speculation.
9) Rethink Retirement Savings
The most common retirement vehicle is the retirement annuity – the worst investment known to man. Retirement annuity salesmen list five benefits of a retirement annuity. Firstly, the tax benefits. They will tell you that you deduct the contributions, but they will fail to tell you that when you retire and start to receive the benefits of the annuity, that flow of income is fully taxable. Secondly, they will tell you about the power of compound growth – returns on returns. What they fail to tell you is that ALL investments offer compound growth. Thirdly, they will talk about disciplined savings. All investments are discipline savings! Fourthly, they will talk about supporting your dependents. Once again, the reason why you invest is to look after you and your dependents. Finally, they talk about long-term stability. The stock market offers long-term stability but with far better returns.
10) Do Not Buy a Car
For most people, their two biggest monthly expenses are their mortgage and car payments. I am not a fan of homeownership and I am even less of a fan of car ownership. In a world where there is a plethora of renting and sharing options, and public transport who in their right mind would you want to buy?
11) Is University Compulsory?
Kids today are graduating from university, saddled with debt and without the skills to meet the challenges of the modern workforce. Modern corporations have started to understand the limitations of formal education. In 2018, job-search site Glassdoor compiled a list of top employers who no longer require applicants to have a college degree. Companies like Google, Apple, and IBM are all in this group. The market value of a university degree has declined while the cost of that education has increased. In the 1980s, a college degree almost guaranteed a job in a specific field of study. This is no longer the case given the higher number of degrees and the shrinking number of jobs on account of technology and automation.
Maybe we need to rethink the paradigm that a university degree is compulsory and embrace the concept of continuous learning through alternative channels. Learning should become a way of life and not be limited to a location. Gone are the days when you study a profession for life. The job market is in flux and workers will need to reinvent themselves multiple times.
12) Fully Utilize Your Employer’s Retirement Match
If your employer matches your contributions to your retirement savings, you should consider contributing enough to max out your employer’s matching benefit. Otherwise, you’re just turning down free money. This is not a retirement annuity – this is a retirement fund.
13) Embrace the Stock Market
The stock market is one of the greatest generators of wealth. An exchange-traded fund is a fund of shares that trade on the stock market like a single share. So instead of buying a share in Amazon, you can buy a share in an ETF that invests in technology companies. In this way, you will be investing in Amazon, but also in companies like Microsoft, Apple, Tesla, Google, Facebook, Tesla, and Nvidia. I am talking about the Invesco QQQ ETF. In this way, you can participate in the fortunes of a large number of public companies and avoid the slow death of having your money in a savings account. Also, you do not have a specific risk of investing in one specific stock. Over the long term, the stock market delivers solid predictable returns that are far superior to a traditional savings account.
14) Switch to a Cheaper Cell-Phone Plan
With the prevalence of WIFI hotspots, most people on average use 1.6 gigabytes of data per month. Interestingly, most service providers’ cheapest data plan provides more than that. Track how much data you’re using and stop paying for more than you need.
15) Lower Your Utility Bills
Consider turning off the boiler that heats up your water. Cold showers boost your immune system, increase circulation, reduce muscle soreness post-workout, and boost weight loss. Watch how your utility bills start to decline. This is good for your health and your bank balance.
16) Time Major Purchases Around Sale Periods
Because demand fluctuates by the season for certain items, you can time your big buys to rake in the savings. Black Monday, post-Christmas sales, and general clearance sales. Retail is for suckers!
17) Cancel Your Gym Membership
Most people with gym memberships only use the gym a couple of times a month. Many of the exercises you do at the gym can be done at home with a bit of creativity. You can watch YouTube tutorials for ideas about home workouts, go for a run in your neighborhood, or swim laps at your community pool. If the great lockdown of 2020 taught us one thing, it is that you do not need a gym to exercise.
18) Use Coupons
Coupons are available on company websites, apps, and online. Before you go out shopping, check your phone or computer and increase your savings.
19) Share Entertainment
Share the payments for a joint streaming account. Netflix is not exactly expensive, although you may also have Hulu, Amazon Prime, and HBO. If you can share these costs with your friends, over time you could be setting yourself up for some decent savings.
20) Plan Your Groceries
Make a list of what food you’ll need for the week, keeping in mind what meals can be made from the ingredients, and don’t buy anything that isn’t on your list. It helps not to go to the grocery store hungry. Meal planning is another great option that can help you save time and money while making it easier for you to eat healthily. You need to only buy what you need and plan ahead to minimize waste and unnecessary expenses.
21) Understand Food Spoilage
Do not be fooled by the expiration date on food items. While it may not be a wise idea to drink from the carton of milk that has been in your fridge since the Nixon impeachment, that bag of lettuce that expired 2 days ago may very well still be good for consumption. Inspect the food to make sure that it has not grown a beard or given birth to offspring.
22) Carpool to Work or School
Ask around or organize a carpool spreadsheet at work to see if anyone lives near you with who you can swap rides with. For your kids, enlist nearby parents or friends' parents to help lighten the burden of the school drop-off lines.
23) Replace Your Incandescent Light Bulbs
I did this a few years ago and I cut my utility expense by more than 80 percent. I went from hating paying my utility bill to extract a small amount of satisfaction from paying it – comforted also forextracting the fact that I was helping repair the planet.
24) Buck the Trend – Move to Cash
Studies have shown that one of the problems with credit cards is that they reduce the pain of purchases. Whipping out a credit card for a pair of Gucci loafers is relatively painless. Although carrying cash has its risks, the envelope approach can be quite effective. At the beginning of each month, get a bunch of envelopes and mark them with your major spending categories that can be paid in cash. Place cash bills in the corresponding envelopes for the month and only spend that cash on those categories.
25) Calculate by Hours
When trying to decide if something is worth buying, try thinking of the cost in terms of how long it takes you to make that money. This can help you get a sense of the true value of your money. For this to work, you need to calculate how much you make per hour. The formula is simple: Net monthly salary divided by (number of workdays in the month (work on 22) x hours worked per day).
26) Used is the New Black
You can get slightly used high-quality items at a fraction of the cost of their newer counterparts. Not only is buying used good for your finances, but it is also good for the planet. Clothes companies are massive polluters and any activity on your part to reduce demand for their polluting products is one step towards healing the planet.
27) “We will be in the library”
Some people don’t realize that their local library is a great resource for free entertainment, especially for kids. Many offer movies and games in addition to books, as well as free events and readings for kids every week. So fire up the SUV, pack it full of kids, and hit the library.
28) Buy Generic
This is a bit of a nono-brainerexpenseo buy generic drugs – although many people believe they are inferior and will not do the job. Generic drugs are not cheaper because they are of inferior quality. They are only cheaper because the manufacturers have not had the expenses of developing and marketing a new drug.
29) Eat In
Eating at home is cheaper than eating out. Celebrity chefs like Jaime Oliver have over 5 million subscribers on YouTube which means you can find plenty of great video recipes if your kitchen repertoire is limited to scrambled eggs.
30) Use the 24-Hour Rule
We spoke about the cooling-off period on major purchases. It is also a good idea to apply this to minor purchases. Put yourself in the spending cooler and sleep on it. If you wake up and the desire for those pants has not peteredpeered out, go for it. If not, get back to the task of cutting coupons out of the newspaper!
31) Designate No-Spend on Non-Essentials Days
We tend to overspend over the weekend. To ease the guilt, call for a moratorium on non-essential spending on Monday, Tuesday, and Wednesday? If this is a little extreme, cut it down to only Monday and Tuesday, or only Monday.
32) Go Outside
I live in one of the most spectacular cities in the world – Cape Town. When you arrive here, you want to spend all your time outside – driving along its impressive coastline, exploring the vineyards, hiking up Table Mountain, surfing, biking, and penguin watching. Most of these activities are free – they require no entrance fee. I know that not everyone is fortunate enough to live in a natural paradise, but many modern cities are promoting outdoor activities.
33) Take Public Transportation
In December 2019, I conducted a mobility experiment. In the interest of highlighting the plight of that delicious holiday fowl, I went cold turkey. I parked my car in the garage and committed to using use public transportation. These were the rules of the experiment – Monday to Friday in the commute to and from work, in addition to any businesorof social meetings from 6 am to 8 pm, I was only allowed to use publically available transport. For Mexico City, that includes the following: metro, buses, bike shares, electric scooters, and public rideshares like Uber/Didi/Cabify. I was unable to mooch off friends or colleagues. I felt free and unfettered. There was no need to worry about psychotic drivers cutting into my lane, no need to stress about parking.
34) Drink Less Bottled Water
If you live in a city with great tap water (like Cape Town)e buying bottled water is a heinous crime against humanity. Even if you do not have great tap water, buy a filter. Not only will the filter soon pay for itself in nobyspending on bottled water, but you will do your part in not allowing the plastic islands in the middle of the ocean from increasing in size.
35) Sell Your Extra Stuff
You use 20 percent of your stuff 80 percent of the time. Sell (or even better, give away) the stuff you do not use often.
36) Rent Instead of Buy
If you need to do a big one-off DIY job, consider renting rather than buying the tools. On the other hand, if you have a large tool collection, think about renting them out online to generate some additional cash flow.
37) Rent Out an Extra Room
One way to make your home more of an asset is to rent out a room on Airbnb and start getting some money into your pocket.
38) Rent Your Parking Spot
If you live in a large congested city where there is high demand for parking, and you have a safe space, rent it out. In this way, you are converting idle assets into cash generators.
39) Consider Becoming a Minimalist
Minimalism is a movement that focuses on reducing the clutter in your life both in physical objects and or distractions. People who embrace it find ways to eliminate the distractions from their lives and it opens up more opportunities for them in other ways and areas.
With 44 percent of Millennials remaining unsure if they want to start their own family, it makes sense that their Instagram feeds may be more full of fur babies than tiny humans. Make the most of this trend by charging these people to look after their precious pets!
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