A large part of doing well with your finances is simply spending less than you earn.
Earning more may be easier said than done, but nearly all of us could probably learn to spend a little less than we currently do, but how would that help us?
More money for investing
If you spend literally all of your pay every time then you’re not keeping anything to help your financial position. If you spend a bit less you can redirect that money towards saving and investments.
There’s nothing wrong with spending some money with Village Roadshow Ltd (ASX: VRL), Crown Resorts Ltd (ASX: CWN) or JB Hi-Fi Limited (ASX: JBH), I just think it’d be wise not to take away all the potential money from your future self and future wealth.
Putting some money towards investing makes a massive difference over the long-term.
Need less for retirement
If you can reduce your ongoing living expenses by say $5,000 or $10,000 a year then you could either get to retirement a lot quicker or perhaps retire at the same age with a lot more money.
Bringing that spending mentality into retirement could mean you need less wealth (perhaps $200,000 less) to fund your retirement expenses if your desired retirement expenditure is also $10,000 a year less than it could be.
Less time earning?
There’s also the possibility of just working less. If you need to work 40 hours to earn $80,000 but you can get by on just $60,000 then one possible option may be to only work 30 hours a week and enjoy more of your life today.
Life shouldn’t just be about finding ways to cut spending. It’s important that you do spend money on the bills and what makes you happy, but I think there’s probably room to find some expenses that could be reduced without any reduction of happiness.
Where to invest $1,000 right now
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Crown Resorts Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.