While some elements of wealth building (e.g. career, investments, choosing an advisor) require careful planning and long term effort, other elements just require one to get started and be committed to make it a habit. Here are some elements which I feel are "just do it" activities.
- Save more money. Spending less than one earns and putting away a set percentage of one's salary sounds hard. For me, a good approach is to start saving, no matter how small the amount. Here are the hypothetical results from a six month saving challenge with some tips on getting started.
- Stop buying stuff. My strategy is to only buy what I really need. To me, there are two categories of purchases, essential and non-essential. I try to reduce non-essential purchases as much as possible. For reference, I consider cell phones, cable or satellite TV, and newspaper subscriptions as non-essential :-)
- Pay cash. There's a reason casinos want players to use chips. Using cash increases the emotional impact of betting money. Similarly, paying cash for one's purchases increases the emotional impact of spending. For example, paying cash for our cars helps me make better choices on both the car purchase and the options.
None of the actions need to be major changes. For example, one could start by saving $10 a month via direct deposit, give up eating out for lunch one time per week and pay cash for purchases for a month. These are few examples of doable actions we used to begin the process of building wealth.
For more on The Practice of Personal Finance, check back every Wednesday for a new segment.
This is not financial advice. Please consult a professional advisor.
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