In the simplified version of "becoming wealthy" there are really only two rules along the road.
1. Make more money
2. Live on less

The make more money idea is great until a plateau is hit. Certainly more schooling, a  second job and internal promotions can help but eventually it comes down to the annual raises and bonuses unless you have your own business - then there is a bit more control over the income and expansion of the business.

Now the live on less idea is more appealing to me because the benefits are seen much sooner than when one aims to make more money. And the other appeal is that the money saved living on less is not taxed, where as the extra money I make is taxed to the tune of 20% or more.

To take the money that we bring home, no matter if it is 12,000 a year or 1.2 million a year, and making that money stretch further would mean more to me than all the classes I could study. Because I have stretched the dollars that I did bring home by living on less expenses I have given those dollars more value. Below are ways to add value to the dollar.

Fill the Holes
 Track the outgoing spending, even if it is looking over the bank ledger and categorizing what has been spent over a 2-3 month time frame; this tracking gives a pattern to your spending. The best way to fill the holes that let money escape is to jot down every dollar spent at the vending machine, tossed in for ordering lunch and extra snacks purchased when filling up the car. It is these small purchases that leave $30 gaps that can be easily filled by bringing a lunch to work and buying snacks in bulk to have at your desk.

Setup a Budget
 Once money is being tracked, it is easier to figure out how much goes to necessary expenses and how much can be allotted for entertainment. There is not going to be a budget out there that has a one-size-fits-all tag on it and even my own budget can vary from month to month. But by setting up a budget all the money that comes in to the house is designated to go someplace, because if it doesn't have a spot, it will most always be spent and not saved.

Cut Expenses
 This can be necessary expenses such a lease, it could mean moving or bringing in a tenant to share in the cost. The easier items to cut are utilities, by being contentious of its use and cutting out the unnecessary expenses that come monthly in the form of subscriptions and memberships.

Shop for Savings
 I hate to buy something without finding a coupon code or researching to make sure I am getting the best quality for my money. This would also include purchasing tested out store brand options as well. But, the best way to save while shopping is to not buy unless it is needed and not because it is on clearance. Savings doesn't always have to found at the retail level, it can be found second-hand through yard sales and classified ads.

Cash is King
 When it's gone, it's gone. There is no way to float a five until you get paid, instead creativity has to be the name of the game when it comes to putting off a purchase until later and making do for now. Cash also makes itself abundantly clear to it's owner when it is about to run out, there are no rough estimates or pending transactions.

Fix it up
 Making a mechanical or electrical item last even a few months longer may be the necessity until the item can be budgeted and saved for.  Decorating a home seems to me to be one of the most expensive parts of having one, however, with a little creativity and patience a home can be decorated with what is already on hand, what can be picked up free from the community and what can be purchased at cut rate prices by getting them second hand

Pay Debt by Interest Rate
 With a high interest loan the money sent each month has very little that goes to principle as the interest is paid down first. By paying extra towards the debt that has the largest interest rate, it is effectively saving money for you by applying that extra towards the principle which make the interest amount lower even though the rate is high.

The natural affect that the above methods of living on less is the abundance of patience and willpower that grows. Sometimes living on less is just saying "No." or pushing it off for later. Eventually these methods add up and you find yourself flourishing and living well with less and for less.


  1. Frank Frugal // Wednesday, October 14, 2009 12:11:00 PM  

    Hi Dawn,

    You've summarized a lot of financial wisdom in this post--nice job. Step-by-step, tracking and reducing expenses will allow people to live on less, no matter what their income level.


  2. Bromoney // Wednesday, October 14, 2009 4:22:00 PM  

    good tips Dawn. These are good because they're things anyone can do, but it's amazing to see how many people ignore advice like this.

  3. Dawn // Thursday, October 15, 2009 8:22:00 AM  

    Thanks for the kind words.

    I would have to agree and include myself as I am a work in progress as well. :D

  4. financiallysmart // Thursday, October 15, 2009 7:24:00 PM  

    Wonderful article. A lot of persons will not understand that to be wealthy means sacrifices. These sacrifices will enable he/she to gain financial freedom which in turns mean wealthiness. I enjoyed reading your article.