The Digerati Life

Are you a frugalist, capitalist or both?

Here are some loose (ballpark) definitions to help you with that question:

Frugalist: someone who is thrifty and who puts emphasis on saving money.
Capitalist: someone who enjoys pursuing money-making ventures and who focuses on income generation.

I had asked this question earlier, and as expected, most people who responded to this have mentioned that they follow both views as they deal with their finances. Seems like the hybrid approach to money management and thought is a popular choice for many finance buffs.

To summarize: the argument is that we’ve got a limited X amount of time to spend. And if we are to optimize how we spend our valuable time while trying to maximize how much money we end up keeping at the end of the day, then what is it that you do? How much time do you spend on frugal exercises vs money-making activities?

I thought this was a compelling question to mull over and to help you assess whether you’re truly doing all you can or are capable of doing to improve your financial situation. If this so happens to be one of your goals in life.

Well, whichever camp you’re on, I thought I’d give some concrete (though general) suggestions on how you can hang on to more of your money by spending less and earning more, hopefully at the same time!

Spend Less Than You Earn: 10 Simple Ways To Spend Less

The keys to spending less are discipline, attitude and organization. If you’re able to delay gratification and say “no” to your inner demands, at least for the time being, then your determination should reward you with more dollars left over at the end of the day.

#1 Avoid temptations.
We’re all subjected to 24/7 advertisements and promotions and have born the brunt of marketing campaigns. Just try sitting through your favorite popular program on television without feeling like subliminal messages are being programmed straight into your brain through not-so-subtle endorsements and commercials. How do you avoid the temptation to consume? Easy. Avoid the source of temptation. Watch less or no television if you can help it. Avoid window shopping. Avoid the Joneses. In my case, I don’t mind being bombarded by advertising and the call of consumerism. I have nerves of steel and have very strong will power, and it’s easy for me to say “NO” to myself.

#2 Use coupons and buy generic items.
Develop a routine that involves organizing and collecting coupons and coming up with a system for buying items. Work on becoming a savvy, smart shopper, buy generic items, shop on sales days.

#3 Don’t use credit cards.
Keep a limited number of credit cards — a couple is enough, in my opinion. Better yet, cut them all up and use cash! You’ll spend 12% to 18% less if you make it a habit to use cash in your transactions.

#4 Make a list.
Always prepare a shopping list before you go out and buy anything. This will help you stay focused on what you need to buy rather than on what catches your eye when you’re out on your shopping trip. This should help curb impulse purchases.

#5 Pay yourself first.
Designate a certain amount of money and have it set up to move automatically into your savings account each month: aim to save at least 10% of your gross income. By doing so, you pay yourself first and it’s money that is “out of sight” and hopefully “out of spending reach”. In other words, if you don’t see this money sitting in your checking account, you’re less inclined to use it.

#6 Cut out your vice habits and drains on your dollars.
If you’re serious about cutting the fat out of your budget, try to hit those things that aren’t really doing much for you. Sorry to be a wet blanket, but vices are a good place to start. Here is a common list of money drains you could probably do without:

• Coffee
• Cigarettes
• Alcohol
• Bottled water from convenience stores
• Manicures
• Car washes
• Weekday lunches out
• Vending machines snacks
• Interest charges on credit card bills
• Unused memberships

#7 Shop at discount stores and outlets.
Buying in bulk will help you save money and in the long run will help you spend less. It’s just more economical to visit discount stores. Marshall’s, Ross Dress For Less, Costco will cost you much less than Macy’s, Nordstrom’s or Safeway.

#8 Buy used.
Want 50% or more discounts on anything? Try Craigslist or your consignment centers. I’ve been amazed by some of the quality I’ve seen at stores and places I’ve picked up used items from.

#9 Downsize.
The moment you downsize, whether it be your car, house or your entire life, you’ll immediately notice what a big break you’ll be giving your wallet. Everything we own these days requires some amount of maintenance, and what many people don’t realize is how much it costs to sustain the stuff we buy. The bigger your car, house, or hobby, the more money you normally end up shelling out to maintain them. Clearly, downsizing and “simplifying” means less maintenance and therefore, less bucks spent.

#10 Postpone purchases.
Delay those purchases you have planned as much as you can. Or make purchases in installments (unless you get charged for it) to buy yourself some time and stagger the financial load. It’s almost as good as saying “no”.

Earn More Than You Spend: 10 Popular Ways To Make And Earn More Money

#1 Get a 2nd job.
Moonlight if you can handle it! Around 7 to 8 million Americans hold 2nd or 3rd jobs… but it can be a tough situation when you’re on the job for at least 12 hours everyday or sacrificing your weekends for the extra money.

#2 Work harder at your job and aim for a raise.
Well yes, we can always try to do better at our own jobs and work on nurturing and cultivating our career. Some jobs, especially those that are offered by some of the best companies in the nation, provide so much more than a basic salary. You can toss in various perks as well, such as raises, bonuses, matching 401Ks and even stock option plans in the mix. All the perks alone can easily add 25% to your base salary… which wouldn’t be too bad!

#3 Do a side business.
It’s probably better use of your time if you build on a side business than work on a side job. A side business is something you can cultivate independently and can easily last longer than any side job you decide to take on. Who knows — many part-time businesses have eventually grown to become the main source of work and income for many.

#4 Sell your used items (recycle and sell).
Cash in on your clutter! What a way to be kind to the environment and pocket some extra change at the same time. The advent of online auctions such as eBay and online classified sites such as Craigslist makes this all even more convenient! Especially if you’re not the type who enjoys spending your weekends holding garage sales!

#5 Invest smartly and make your money work for you.
Once you have some disposable income after retiring your consumer debts, then get your money to work for you by investing prudently. After some time, the compounding effect on your money makes it seem like you have an extra income source — actually, a good investing strategy allows you to develop a healthy, passive income stream.

#6 Invest in yourself.
Discover your strengths and talents and capitalize on them. And by keeping a positive attitude and doing something you love…well you know how that saying goes. This cliche holds true though, as we’ve seen many people who’ve done very well by doing the things they enjoy; with time being limited and life being short, as they say — doing what you believe you like and do best can be emotionally rewarding as well as financially rewarding, given some time.

#7 Become self-employed.
I mentioned earlier that having a side business helps to add to your income. But becoming fully self-employed and having control of your own work can be quite fruitful for people who have an adventurous and entrepreneurial bent. Some of the wealthiest people around are business owners.

#8 Freelance.
Become a contractor and get some side projects! Since quitting my day job, I’ve been focusing my energies on my small business, maintaining web sites and freelancing. All in all, I’m making around 60% of what I used to make, but I hope that in several years’ time, the work I do will hopefully be pulling in an income that will equal what I used to get from my day job.

#9 Seek money-making opportunities and go after them.
This can go beyond looking into investment or business opportunities and participating in them. You can also decide to take a bit of a risk by considering places that have higher demand for certain work, jobs or skills that you may possess. How about moving to a new location that has higher demand for the type of work you’d like to do? Be on the lookout for opportunities and see where those can take you.

#10 Get a higher paying job.
This used to be a strategy I employed during the earlier years of my career. I was quite driven about my career at one point and was quite fearless at pursuing various job opportunities during the tech boom in the 1990’s. Definitely a big motivator was the compensation offered during that time — during the dotcom period, companies would outbid each other over resources, particularly over employees and workers. During that era, job hopping was a lucrative way of making more money.

As you can see, there’s no shortage of what you can do to be able to spend less than you earn (or earn more than you spend). Despite all these possibilities, I still hear a lot of excuses from people who feel it’s hard for them to hold on to money. I’m sorry for bringing in another cliche into this discussion, but I must say that “if there’s a will, there’s a way”. By being resourceful, determined, focused and disciplined, you’re on your way to reaping financial rewards down the road.

 
Image Credit: Workplace Live