The following is based on my observations and common sense. However, usually with these wealth series, I base the post off of rich friends that I know of that have over a million dollars. Now for my discussion about the Financial Saving Delta.
Your Financial Savings Delta is simply:
(Discretionary Income – All Other Expenses) = Savings Delta
“Discretionary Income” is the money from your paycheck that could be in your wallet. So it’s your Gross income – (Taxes, medical, 401(k) contributiosn, and practically anything else that is automatically taken out of your paycheck).
“All Other Expenses” is all the expenses that you spend your discretionary money on.
It’s a very straight forward simple equation, but knowing it and actually increasing it are 2 different matter!
The 1st way to increase the Savings Delta is to increase the “Discretionary Income” while holding the “All Other Expenses” constant.
So what are the ways to increase the “Discretionary Income”:
- Get a part time job in addition to your fulltime job. If you are a work house, you could instead get another full time job in addition to your 1st full time job. Yes, I’ve thought about this, but I want to know my kid’s names (plus I love them…)
- Win at the neighborhood poker night game (I’m good at this, but not much money to win that way, plus the booze costs make it a fun break even event). I could go bigger scale, but I could also lose bigger too. Maybe someday I’ll try it out, but for now I’m good.
- Find a product to sell on eBay. I’ve been successful with this in the past! Note that I didn’t say sell your old stuff. While this is commendable, it’s a limited source of product. And besides, most often you sell your stuff at a loss vs. what you initially paid.
- Investment! Stocks, bonds, real estate, whatever you fancy… I hope to really expand this area soon!
- Blogging (lol, to date (almost 6 months) I’ve made $5.00… That works out to be about a penny and a half per hour of work! Move over Bill Gates, I’m moving on up!
The 2nd way to increase the Savings delta is to decrease the expenses that you have.
This is easier than it sounds! Here are some ways to do so:
- Switch your credit card balances to no-interest credit cards. They sometime offer these kinds of deals. Make sure they don’t charge you a transfer fee thought.
- Reduce your dinning expenses. I was amaze to find that I could save $40.00 more a week, jut by packing a cheap health lunch instead of eating out with the guys.
- Do It Yourself with help from Mr. Google, almost anything for me is possible!
- Carpool, yeah this kind of sucks but it reduces your commuting cost by practically half!!! Not to mention extending the life of your vehicle!
- Cut out pop, go with flavored packets
- Pay off your mortgage early, this will reduce you expenses by ¼ t 1/3!
- Eliminate your land line! Go with Magic Jack, Skye, a cell phone or whatever…
- The list just goes on and on…
It is very important to increase that Savings Delta though, and then invest it!
Can you think of any additional ways to dramatically increase the Savings Delta?