Wealth is made by saving money and not by earning more. As our website’s mantra says Income – Savings = Expenses. To save more and reach financial freedom early we have to increase the percentage of saving money. This calls for a lot of sacrifices which we once took for granted. But too much of sacrifice leads to many problems.
When I decided to save for a good financial freedom and retire early I had to cut on a lot of things. I decided to travel less, buy less alcohol, going less to restaurants and buying things which I do not need. This led me to a lot of temptations. The more I controlled myself the more tempted I felt. I feared that I would suddenly spend a lot more than I saved because of these cravings.
Reward yourself regularly
Till now I am able to control all these cravings by looking at the larger picture and by introducing smaller rewards. For example, I reward myself with a travel vacation if I save enough money through a mutual fund. Similarly, instead of spending Rs.4000/- per month on alcohol, I decided to spend only Rs.1000/- per month. By doing this I can effectively save Rs.36000/- per year on alcohol.
See the accumulated cost for better understanding
These days I have started calculating the accumulated cost on every item I spend upon. An item cost doesn’t look big but over time the same cost accumulates to a bigger amount. This puts a lot of pressure on me and restricts me. But my dream of saving money and becoming financially free is far too big for me to let it go.
I write this article to tell myself and you that small rewards help to ease the pressure. Set a goal and when it is reached then reward with something that you had always wanted. I am surprised to see the expenses I am able to cut. Just saving money won’t help grow wealth. It needs to be invested. I have written a whole category talking about where to invest. Please check it out.