Thursday, March 5, 2015

How to Earn - Step 1: Learn New Skills

If you tried to spend less as recommended in "How to Save - Step 1: Spend Less Than You Earn" but found that there's still not enough leftover to save, maybe it's time for you to earn more money.

The equation is simple. Earnings - Spending = Savings. Sometimes just spending less is not enough. Once you've cut your spending down, it's time to maximize your earnings to achieve greater savings.

The best way to increase earnings is to invest in yourself. That means learning a new skill that will increase your earnings potential.

As technology and the economy changes, some jobs will be replaced while others will get more valuable. New York Times has a great infographic that highlights this change at: The Changing Nature of Middle-Class Jobs -

You need to learn new skills in a field that 1) you're interested in and 2) offers greater earning potential and job availability in the future.

For example, some areas that offer excellent potential include:
- Financial Analysts / Accountants
- Programming / Mathematics / Data Science / Technology
- Healthcare / Nursing

By having these new skills, you'll be able to find part-time work to supplement your existing income or upgrade your current job to a better one.

Learning is hard, but it gets easier if you're interested in the subject and you keep in mind the brighter future that's in store.

Are you learning something new? Post in the comments below!

Summary (TLDR): Spending less is not enough. You need to earn more. A great way of doing that is to learn new skills that will make your labour more valuable.

Tuesday, March 3, 2015

How to Save - Step 1: Spend Less Than You Earn

Spending less than you earn may seem obvious, but many people fail to follow this rule.

In today's world, access to credit and debt is extremely easy. There's credit cards, personal loans, card loans, mortgages and many other enticing forms of debt that allow you to spend more than you earn. However, the key to building long-term wealth is to avoid debt. The only way to do that is to spend less than you earn. Not more. Less.

Debt is like a black hole, the more debt you have, the harder it is to become debt-free. As you accumulate debt, you become a riskier borrower, which means your interest rates become higher, which makes it even harder for you to pay off your debt.

By spending less than you earn, you can pay off existing debt and start to accumulate savings. As these savings grow, they become wealth, and that wealth will create more wealth.

Even saving just $2 a day means you will end up with $730 extra each year or $7,300, over 10 years. That didn't even consider the savings on interest or potential investment gains! So, if you give up that cup of coffee or bar of chocolate each day, you'll live way more comfortably in 10 years.

The hard part, of course, is how you can spend less. It obviously will involve giving up some of your current luxuries.

Here are some areas:
- No more coffee, or make your own coffee.
- Less snacks. Snacks are very expensive and offer little nutritional value.
- Less entertainment. Highly expensive, get out of debt first, then entertain yourself.
- No more TV. Youtube is free, or watch something educational on Coursera or Khan Academy.
- Find cheaper alternatives. Shop around for the lowest priced things. Especially things that you pay for regularly, such as insurance, internet, phone, transportation.
- Stay healthy. Less medical bills.
- Use coupons and buy only on sale. Become a good bargain hunter.
- Don't buy unless it's necessary.

Have other spend less tips? Post them in the comments below!

Summary (TLDR): By spending less today and saving that money, it will allow you to spend more in the future as your wealth grows. You can spend less by creating a budget and cutting out unnecessary spending.