Simple Financial Lifestyle Adjustments

A common financial struggle is how everyone talks about not having any further savings to invest. Or that the solution is to make more income in order to have extra cash to invest with. The simple reality is that only minor lifestyle adjustments are needed to solve this financial dilemma.

Expenses can be categorized into either desires or necessities. Necessities would be the minimum basics in order to live such as shelter, food, medicine, and clothes. Desires are additional luxeries beyond basic living expenses that improve our level of happiness, satisfaction, or comfort. Cutting out some of the unnecessary expenses that stem from our desires does not require any further hard work nor will you really miss it too much either.

Simple Lifestyle Tweaks To Increase Savings

What if you want to come up with an extra $100 monthly in cash flow to start investing with? Here are some simple and easy possibilities that could be immediately implemented with minimal impact to one's lifestyle.

Savings Reductions:

• switch to a lower cost mobile phone data plan ($10 monthly)
• stop buying Starbucks $2.50 coffee twice weekly ($20 monthly)
• eat at home one extra time weekly instead of dining out on $15 meals ($60 monthly)
• cancel deluxe cable TV channels ($10 monthly)
  Net Total: $100 monthly extra savings

For simplicity, assume we just invest the $1200 (12 x $100) in annual savings at the end of each year (instead of quarterly or monthly, which would generate even higher returns).

As an example, a one time $10,000 investment left alone for 40 years at an 8% annual compounded return (without any further contributions):

$10,000 @ 8% over 40 years = $217,245

Now take the same initial $10,000 but at the end of each year you also reinvest $1,200 from the above "lifestyle adjustment savings" that is recurring. After the same 40 years of compounding annually at 8% return the overall result would be $528,123. That is a significant boost of more than double the amount (nearly an extra $311,000) of the example where no further contributions are made. And this extreme feat could be accomplished by just saving only $100 monthly with simple tweaks to one's lifestyle that anyone could achieve.

Scrutinize All Expenses

Even the basic life necessities expenses can be scrutinized in order to find cost savings that can be diverted immediately into ongoing investment contributions. Such possibilities include switching to a different supplier for groceries. Take advantage of sales to stock up on regular use items. Seek quotes from different sources for your insurance or mortgage and negotiate prices instead of simply renewing from your existing company strictly due to convenience. Look into grants for funding children athletic or artistic activities for lower income households.

The path to great wealth generation is through making wise decisions and taking many small simple steps whose cumulative effect weighs heavily in the end.