Some think that you have to fake it to make it… and in some ways this is true.
But I think it’s also true that less is more when it comes to accumulating wealth while having an average salary.
Whenever a person moves up in their salary amount, or their rate of pay, they start to think that they have made it. They start to buy more expensive things because they believe that they are supposed to.
But the way to build wealth while on a modest income is by practicing the less is more concept!
The “less is more” concept in a nutshell is that the less you spend, the more you get to save for wealth building activities!
Here are the ways that you get ahead by following the Less is More idea:
- Less House! It’s true, that housing has traditionally been a great way to acquire wealth (excluding the past few years). But along with a big fancy house, comes big expenses! With a larger house you will pay
- More in Real Estate Taxes (unless you are outside of city limits, or in a state that doesn’t tax Real Estate).
- More on your utilities (gas, electric, water, sewage)
- More for repairs to your appliances and house (roof shingles, heaters, water pumps, etc).
- More on landscaping (after all you have to keep up with the Joneses, if you live in a big house).
- More on Cosmetic features (faux paint, fancy decorations, artwork, etc)
- House cleaning…
- Less Car! If you buy a decent dependable car instead of a luxury car, you’ll save money instead of spending more!
- Insurance will be less for a cheaper dependable car.
- Surprisingly, luxury cars break down more than the reliable cars reviewed in Consumer Report Magazine.
- Auto Repairs will be more expensive, or auto mechanics will charge you more because they know you can afford it.
- It’s more apt to be stolen.
- Less on Eating out and Living Large!
- Eating out more (especially drinking alcohol), is a quick drain of money!
- Buying Football (and other sport) tickets! Nothing waste money quicker than spending hundreds of dollars for sporting events.
- Fancy vacations! There have been years where my family had to vacationed in backyardsville, so that we could get our finances stable.
- Less on Electronics!
- Skip the newest smart phone when it comes out (iPhone anyone)! At first, they are typically overpriced. Some people toss their current phone and run out to get the newest electronic gizmo! As someone in the technology field, I understand the temptation! But if I can do it, then so can you!
- Once you buy a product stick with it! I keep my computer at least 5 years! Once we buy our newest TV (with credit card reward points money), we’ll keep it until it breaks down.
- Don’t stick to brand names! Believe it or not, an Apple IPod is still just an MP3 player… I know I can buy an MP3 player for a much cheaper price!
These are just some of the ways that you can apply the Less is More idea to save more money which could then be used for investment, or paying off debt!
Readers, did I miss any other big “Less is More” item?
-MR
Great post. I completely agree that if you get used to spending less on the whole, you will be so much better off in the future. It almost has to just become a mindset.
I was at the mall the day the Iphone 4 or whatever it is called came out. There were so many people clamoring to get in the store, it was ridiculous. New gadgets have no appeal to me. As long as what I have works, then that is good for me. So, not having that ‘need’ to spend is what helps us save- you are totally right on this one!
“Less is more” is a great way to save money and pay off debt. Less continual habits saves a bunch too – drinking, smoking, whatever. 🙂
@Everyday Tips
It’s the little things (and big ones in the case of a house), that add up and zap us of the potential to become wealthy.
I know a young couple that just bought a $350,000 dollar house because they though it was a good investment. But I don’t think they focuses on the high real estate taxes, utility cost, upkeep and other expenses that go with such a house. I hope they’ll be okay.
@Budgeting in the Fun Stuff
Yes, really smoking and drinking alcohol is an unhealthy luxury… it’s just that people don’t realize it!
Such habits are like a large parasite attached to your checkbook! Suck all way all potential to become wealthy…
I’m all for the “less is more” approach to life. We recently were offered to buy a $520K home from a friend. (He owns lots of rentals and has wanted us to be a tenant for a while). He offered to foot the loan and give us a really low APR. However, the house is really big and though it sounds like a swell deal, the true costs would definitely be more than we’d want to pay. We declined his generous offer.
If only I had listened when it came to less car… well, if I keep it for the long term, shouldn’t be so bad. 😉
@Little House
I know what you mean! Nobody factors in the hidden cost of owning a house. I guess nobody talks about it, but it can be pretty expensive!
Still, it was nice of your friend to offer 🙂
@Kevin@InvestItWisely
The car expense isn’t too bad if you hold onto it for a long enough period!
Besides, it’s nice to have a few pleasures in your life, and if your still able to save while buying it… it’s still all good!
@Suba @ Wealth Informatics
hehe, yes it’s all the good as long as you make sure your are saving money at the end of the year!
The savings delta must be high!!!
Less expensive clothes, shoes, and bling is a good addition. Certain expenses are necessary for work and some social occasions, but day to day it’s not necessary to be wearing expensive clothes. I’m sure many might disagree, but that’s my thought!
@Squirrelers
Ahhh, yes… Good adds! Especially jewelry! The markup on new jewelry is so high! And believe it or not, but a lot of appears to be different sellers is really one or two companies.
In my line of work (computer analyst), I really don’t require fancy clothes, but some in my department still dress high… silly techies… 🙂
Great post!
Agree with jewelery! I’m trying to consign an old necklace (silver) that my ex boyfriend bought for me for $100, and it’s only worth about $15 now haha… so sad!
Material things= less is more.
Experiences that you won’t forget= priceless.
@youngandthrifty
I agree, the experiences are priceless, especially if you take a lot of pictures or video for reliving the moments later on!
Sorry about the jewelry, I had a friend that use to work at a jewelry store’s headquarters. The markup blew me away! If I can help it, I try to avoid buying jewelry, especially new jewelry!
The other thing about buying less house, is that it’s easier to keep up with the Jones. In my neighborhood, I’m pretty sure that I am one of the top end earners on our street. I still wasn’t the Jones’s family though. Many people still had better cars and threw more lavish parties for their kids than we do. We trump everyone on vacations though.
I like my neighborhood. With a few exceptions, most people are pretty sensible about their spending. .
(My house was $154 when we bought it 10 years ago..now it’s worth about $240)
Sandy L
lol, we actually did the same! But we did so because we also know that my wife was going to stop working, so that put us more on par with our neighbor earnings… Still, we didn’t want to be the poor house on the block.
Plus, our school system is great! I’m glad we went the way we went 🙂 and it sounds like you do too!!!
$240,000 is great house appreciation in this market! Congrats!!!
I don’t know if you can add vacations to the list, why take a 5 star hotel when you can have a decent experience in a 4 star hotel. I speak from experience in regards to vacationing in Cuba for example. Same with timing your trip, it can have a huge impact on your budget.
The hard part about less is more is society entices you with cheap credit so it gets hard for some people not to go the extra mile in order to “be happy” with their purchase. They forget that this happiness is only temporary!
Cheers!
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@BeatingTheIndex
Being wise with hotels sounds like a good add to me! 🙂
Of course don’t go down the ladder to low though. Especially with Bed bugs coming back into fashion and all.
Yes, credit takes discipline, that’s for sure!!! I know couple Disney every year while their oldest child was only 2… insane!
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