Live On Less Than You Earn

Live On Less Than You EarnThis is the first of seven articles in a series on the key steps involved in the financial planning process.

Striving for financial security is not about the drive to be rich or trying to have it all.  Rather, your decisions about money need to be filtered through your focus on the intangible things in life, including meaningful relationships, your faith, and good health.  In order to make wise choices about your long-range planning, you must first develop the disciplines related to spending less than you earn.

Look at the Big Picture
In today’s economy, it is becoming cool to be frugal. Silent saving is replacing conspicuous consumption.  You can actually live a fulfilling, fun life while looking for ways to cut costs at the same time.

In fact, if you look at how wealthy people live their lives, you will find the vast majority of America’s rich live far below their means.  It just makes sense.  People who become wealthy get there by saving and investing, not by more and more spending.
If you make sacrifices now, later in life you will be in far better shape to achieve your retirement dreams.  It’s called delayed gratification, and it’s an important concept to master if you want to build true financial security.

Let’s look at an example of what cutting out $100 each month from your spending could mean in more retirement dollars.  $100 per month invested at 10 percent over 30 years compounds to $226,049.  That’s quite a retirement nest egg all in itself!

Write It Down
Getting on track with your struggles with money begins with a common sense approach.  First, take stock of where your money is going.  For one whole month, keep a notebook handy and write down every expense that you make.  You can’t begin to make changes in your habits with money until you get a handle on exactly where your money is going.

Change Your Habits
If you are used to spending every dollar of every paycheck – and sometimes more – you might think it would be tough to cut back on your expenses.  But when you look at what is actually necessary and what’s really a luxury, you’ll find things to cut out, even on a tight budget.

Find Replacements
Sometimes substituting your favorite indulgences with a lower-cost alternative can add up to big savings, which is an important first step in your making progress toward financial security.
Helpful resources are available at and

Practical Tips

• REFINANCE YOUR HOME:  Carefully consider the pros and cons of refinancing your home before taking this cost-cutting step.

• INSURANCE:  Compare prices for auto, home, health, business and life insurance.  Consolidating with one insurance company could lower your insurance costs.

• FINANCIAL FEES:  If you have direct deposit, most banks offer some type of free checking so as to eliminate a monthly fee.

• CABLE AND SATELLITE TV:  Competition in this industry means that new packages are available that could save you money.  Consider downgrading your package to cut out some premium cable channels.

• CELL PHONE:  Before you renew your contract, ask yourself:  Do you really need a new phone?  Are you paying for Internet and texting but not using it enough to justify the cost?  Would a cheaper plan serve you just as well?  Do you really need a landline as well?

• INTERNET PROVIDER:  Shopping around for a better package of telephone services might also save you on your Internet access if you use DSL.


[To read this entire series of blogs, go to the Education tab of our website and click on “7 Steps Series.”]

How to Enjoy Retirement without Stress

“18 Common Sense Rules for Enjoying Your Retirement”

18 Point Checklist

Dickinson Investment Advisors - Council Bluffs, IA
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