Put Down the Plastic Junk!
The highest three largest expenses for Americans are housing at 34%, transportation at 17.6%, and food at 12% of yearly expenditures. Those three expenditures alone constitute nearly 63.6% of yearly income. This is already unacceptable. People must learn to live well within its means in order to generate surplus wealth, thus we must: consume less housing, less transportation and less food (or at least get better value for your dollar). Everyone in your house doesn’t need their own 500 square foot room and a personal Jacuzzi! You don’t need a $50,000 dollar Tahoe or a $5,600 gasoline bill; you are pissing money down the toilet! What you should do is buy a used vehicle with decent reliability ratings for around or less than $12,000.
One of the most important, yet overlooked rules in life is pay yourself first. Ideally, you want to figure out how much you need to contribute to savings and have this deducted from your checking account each month. You shouldn’t even begin to think about spending a single dollar on worthless consumer junk until all your bills have been paid and you have built up an emergency fund of ~6 months expenses. If you can’t do that, then you shouldn’t be buying yourself that new cell phone or television. Let’s be honest… just because you live in a developed country does not mean you are entitled to a cell phone, a new TV, or even cable. These things are all luxuries and can be struck from your budget.
If you are a so-called “millennial” you have a most valuable asset on your side: time. The time value of money is an extremely important principal which rewards those of you that begin saving as young and quickly as possible. In our youth those that have the best chance of succeeding financially will grab as much capital as they can. Frugality and intelligent investing will be the unique keys which unlock the potential freedom many of you can attain.