Brian Tracy walks through concrete ways to cut spending without major sacrifice. Skip your daily $5 latte and save $1,250 a year. Cancel cable for another $1,000 to $1,200. He also flags the 28% rule: if housing costs more than 28% of your income, you're spending too much.
$1,250
28% of monthly income
Seven
Hello, I'm Brian Tracy and today I want to give you some tips on how to save money in the year ahead. Did you know that you could save twelve hundred and fifty dollars next year by passing up that morning five dollar latte? You could kick start your day instead with a strong jolt of your own home brew. And while we're on the subject, what are you spending each month on? Cable satellite TV? Multiply that figure by 12 and subtract the cost of a TV broadcast aerial and you could add another $1,000 to $1,200 to your savings. Kiddie giving up fancy coffee and overpriced cable TV are but two examples of low sacrifice measures to save money. They're part of a stunningly simple strategy that anyone can adopt and you only need to do two things. Maybe you don't think you can live on less than you earn, but you can. It requires an honest needs assessment. Ask yourself are you paying more than 28% of your monthly income on lodging, house payments, apartment rent and so on? The 28% is the benchmark that most lenders use in calculating your debt to income ratio. If so, you are living beyond your means and need to make a move. Then there's that income sucking credit card. Are you reaching for it to pay for items you once bought with cash? Take a look at last month's statement. Notice how all those little charges add up to one big bill. You can no doubt come up with other examples, but the important thing here is to find ways to live below your means so that you can start saving that extra money. Here are some tips for living below your means. First, know what demands you are placing on your income. Make a list of everything and make everything on that list a candidate for economizing. Second, set a realistic monthly savings goal, multiply it by 12 and that's what you'll have saved by this time next year. What is your next move? Are you going for debt pay down a family vacation or maybe just a cushion in case of an emergency? Decide and you'll know whether you can live on the leftover income. Third, pay down your debt. Living debt free is the clearest path towards living below your means and saving your money. Consider consolidating and paying off your credit card debt. Find a sharp pair of scissors and cut up the credit and bank cards you need to pay down. Next, make a budget and stick to it. If you have followed up the advice above, you are already more than halfway to a budget. You cannot get a handle on what you can save until you know everything about what you earn, what your recurring expenses are, and where all that other money is going. You need a budget. With that said, here are the seven suggestions on preparing a budget. First, decide on how you want to track your budget. You can use anything from a spiral notebook to financial software, or look for free spreadsheet budget templates online. Second, record all your income and be conservative on your projections. Include your gross income, bonuses, interest income tax rebates and all other sources. Third, determine your expenses. You'll spend more time on this, but know that expenses are the most controllable elements of your budget. Budget your expenses into categories of fixed and discretionary. Fixed means that, like rent and car payments, you can't avoid them. Discretionary are things that you can put off or delay to a later time or to no time at all. Fourth, compare your income with the expenses. Most Americans spend about 70% of their income on fixed expenses like lodging, rent, utilities, transportation, food, etc. The remaining 30% provides scant wiggle room. Unless you can find a way to cut down on the fixed expenses. The best rule of thumb is to budget total expenses at about 90% of your income. Fifth, improve your situation by focusing on the expense side of your budget. If you want to live below your means, you must be honest about what are necessities fixed and what are luxuries. Discretionary. Cut down on the latter and try to reduce the former. Sixth, focus on your goals. By now, you should have a good snapshot of your financial health and how much you can save and still live below your income. Include the big ticket items like your child's education, a new home, and your retirement years. And seventh, revisit your budget and keep close track of your progress. Are you on target to achieve your monthly sales savings goals? A monthly review, preferably around the 10th, will allow you to check whether your spending estimates were accurate or unrealistic. If unrealistic, you need to adjust them for the coming month. Saving your money is about setting your goals and priorities. You do that by choosing what you are saving for, setting a budget and recording your expenses. You can live below your means and save for your future money. Make the commitment and do the work. This time next year, you'll be well on your way to reaching all your financial goals. Before we wrap up, I'd like to leave you with a thought to share it with your friends and followers. You can have more, be more, and do more because you can change the person you are now. I'd love to hear from you. So my question today is what is one thing that you can do to save money starting immediately? Leave a comment below and I'll be sure to follow up with you. Thanks for watching. And remember, if you want to change your future, take action and take action now. If you enjoyed this video and feel it was valuable in teaching you about how to save money, subscribe to my channel like this video and share this video with your friends. Don't forget to click the button on the screen for a free gift. Thanks again for watching.
