Ever look at those rich people and wonder how they managed to accumulate so much dough? Here’s one secret: Many wealthy folks didn’t start out that way. In fact, many grew up quite poor, so much so that even once they starting making money, they continued to live as though they didn’t have any.
It might sound crazy, but sometimes you actually have to live like you’re poor in order to build wealth. Here are some ways to start:
Create a budget and stick to it obsessively.
This is one of the best ways to track your finances and make sure you’re not overspending. Remember that just because you can technically afford to spend more on a certain category of living doesn’t mean that you should.
Buy a home well below your means.
You might get approved for a large mortgage, but resist the urge to max out on borrowing. Instead, find a modest home that meets your needs and comes in well below the amount you can afford to spend.
Don’t drive a fancy car.
Make your own food.
Restaurants charge a serious markup, and you’ll almost always pay more for food that’s prepared outside the house as opposed to what you make in your own kitchen.
Take simple vacations.
You don’t need to fly first-class or stay at a five-star resort to have a good time. Traveling is about new experiences and enjoying your surroundings and company.
Do things yourself.
Don’t hire a handyman when you can fix your own leaky roof. Skip the lawn service if you’re capable of mowing. Avoid the nail salon and give yourself manicures at home. You can put away some serious money if you don’t outsource the things you want or need done.
Make saving a priority. Force yourself to put money into a savings account every time you bring home a paycheck. Set up an automatic transfer from your checking account to your savings account to stay on track.
Pretend you have less money than you do.
You know all that money you’re putting away so that you can one day live like the rich? It may be sitting in your savings account, but pretend you don’t have it. This will help you avoid the temptation to spend while keeping you focused on your goals.
Lock your money away.
If you really need the discipline to save money, or to avoid dipping into your savings account to buy the things that tempt you, put some of your money in a Certificate of Deposit or other such safe investment that comes with a withdrawal penalty. You’ll be less inclined to take out that money and incur a fee for something trivial. Before you do that, however, make sure to always have enough money on hand to cover short-term expenses and emergencies.
Saving money and growing your wealth is all about self-discipline. It’s easy enough to fall into a pattern of overspending, but the less money you waste and the more you put away, the closer you’ll be to reaching your goals.