Becoming Thrifty Rich
Small changes to things you do each day and a slight shift in mindset is all it takes. The value of each dollar you save today helps you in so many ways tomorrow. What can you find, what can you change?
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About Why We Care
We are helping to change one financial life at a time.
Thrifty Rich was founded to help build an effortless way to change how we save and understand finance no matter what your situation currently is. We are always taught to focus on the large items, the big spending, and the big savings, but rarely are we taught how much a difference small easy choices can make. If you can empower yourself to learn and change you mindset, you can reach almost any goal you want to achieve. Remember it just takes $30 a day to reach a million dollars by retirement.
The Power of $1
It is small, it is possible, the more of them you can save the more it grows over time…
Know Your Goals
We need something to reach for. Small or large, set goals and remind yourself daily of them…..
We all spend, we have to. However, spend spendsible and you can begin to make big changes with small impacts..
Making It Work
Put all together, understand the power of $1, set goals, spend sensibly, and create new habits. You are now Thrifty Rich
Why $1 is more than $1
There is no doubt most of us have heard terms such as compound interest, inflation, rate of return, etc. These are very common financial terms and often used when looking at retirement, investments, or other wealth building accounts.
The problem with most explanations is that they don’t break out down to something that makes sense and that is relevant to each of us. So without going into all the mechanics we break it down into some very simple concepts in the infographic for you.
Tip #1: Knowing Enables You
When you know the future value of the money you earn it will help you prioritize how you spend that money. Sure, it may not be exciting to save $1 for 30 years to make $5, but apply that concept on small things each day. $3 for a cup of coffee, $2 for a soda, $10 for lunch, $20 for dinner……before you know it you can see where your daily spending is preventing you from reaching a full retirement or that house you are saving for.
Tip #2: Consistency is Best
Making goals to save a certain amount of money for house, school, or retirement is great. Where the problem lies is once you make that commitment and set up a large yearly or monthly contribution you stop and cap your goals. Truly changing your financial outcome will take one more change. Finding ways to increase your savings to your goals $1 at a time. It may be a cup of coffee you give up, using a coupon, or any other way. Set a saving per day goal and work hard to achieve that from the disposable income you have. Remember if you can find $30 a day, that will add up to over $1M in 30 years. Adjust that goal as you see fit, but always remember what you spend today has an impact on what you spend tomorrow.
Tip #3: Start Small and Grow
Learning to save and apply that savings by day takes practice. Start small and see how you do. For example, try to save $1 a day. This should be easy in most people’s daily routines. Use a coupon, turn off some lights, eat left overs, etc. Once you master that, keep looking for additional ways to save. Check out our blog and savings ideas for more ways to save.
There is lots of great advice about goals. For the most part they can be summarized as follows:
Specific – Make them something that matters with detail
Measurable – Make sure you can track progress to achievement
Achievable – Keep them within reach
Realistic – Non-Realistic goals will never help you
Time Bound – Giving them time gives them a path to achievement
Ok, great you got that. So how do we simplify the Goals you want to achieve into something you can use everyday?
Tip #4: Goal Setting Visualization
Nothing helps to set a goal by a picture. Finding a your own unique picture that represents the goal or goals you want to achieve gives you a visual reminder of what you are working for. Find that piscture, make it real, and remind yourself of the things that are important.
Tip #5: Goals Must Be Personal
Sure, buy a house is a good goal. However, buy a house on so and so street because that is where my best friend lived and it is where I want my kids to grow up is much better. When finding that goal, determine why it is so important to you and the things that make it personal. Wrap it up with a picture from tip #4 and you will have something that you drives you.
Learn To Be Spendsible
Tip #6: Find Something To Save Each Day
The best way to become spensible is to start with a simple goal of finding one way to save on something you would have bought each day. As you begin to grasp the concept you can add more and more things and even make it a game. This is like looking for spare change in you couch every day. Each thing you find brings you closer to your financial goals.
Save a cup of coffee $5
A coffee a day can easily add up to more than $155 a month or $1,800+ a year. Find days to either make coffee at home or skip it for something more healthy and log your savings!
Average $180 per year saved
Skip the soda $2
Skipping a soda as much as you can not only logs you $2, but it is great for your health. Add to your savings and lose weight!
Average $75 per year saved
Bring your lunch to work $5-10
We know, it is easier to buy the $10 lunch at your local restaurant, but this single habit can cost you thousands per year. Figure out what you like, pre-make as much as you can and enjoy the savings.
Average $600 per year saved
Making It Work
How you become Thrifty Rich depends on how you take the tips above and put them into a system that works for your. To have the most success begin small and follow your results, if it is working you can add to it. Getting to Thrifty Rich is about making a smart choice on every dollar you spend.
Tip #7: Setting Up a System
There are three key things you must do to start your journey:
1. Establish goals and determine the daily savings required
Pay off debt, buy a car, save for house, etc. Remember to create goals based on tips 4 and 5 above. Once you have them, you will know how much money you need and by when. You can then calculate the daily amount of money you need to save to reach them. Simply divide your amount by the days left to achieve the goal. Do that for each goal and add the overlapping time periods. Now you know what you need to do.
2. Find ways to save
Now that you have your daily savings required to reach your goals, it is time to start to find ways to reach that number. The perfect case is if you required daily savings is below your average daily spending. In this case you should be able to reach you goals by simply finding creative ways to save. If it is the other case, then you will have to either find more income or pay off current debts. Either way, you will know how much each thing you spend on impacts the goals you desire.
3. Move the savings via cash, another account, or to some other bank
Unless you have a very strict budget that you follow, the best way to be successful is to move the money you save into another place that you don’t have direct access to. If you leave the money in say a checking account, it becomes to easy to use it for something not related to the goals you have set. Doing this also lets you see how your money is growing. Ideally, you would want to move the savings into some growth type of account (mutual fund, savings account, etc.)
Tip #8: Sometimes You Need That Cup of Coffee
No one is perfect and that is OK. We all need things in the short term that will impact our long term goals. The key is to understand how that choice is impacting your longer term goals. If you understand that you can more easily evaluate if you really want the short term item. Sometimes we need a $5 cup of coffee, and that is ok. Being Thrifty Rich is understanding the trade offs between the short term things and the things that really matter and to gradually make more contributions to long term goals vs. short term wants. The more smart choices we make the larger the impact we have on the things that really matter.
Be Thrifty Rich