Four Ways the Rich Manage Their Money

I came across this article via sk*rt who found it from Boostle Blog, but I thought it would be worth highlighting here.

Nishank Khann:

You don't have to earn more to get rich. People often find that concept hard to grasp. Read that again...

You don't have to earn more to get rich.

Get rich simply by strategically managing your current income. It's a lot easier than you think. We'll show you how.

— If you think you can, you can.
— If you think you can't, you can't!

1. Build, Not Bleed Wealth

The biggest factor holding you back is the percentage of your earnings that you save. Think you're living from paycheck to paycheck? Chances are that you're not!

The second you get your salary, set aside 20% right away. Don't touch that money. Try to improvise with the remainder. Eliminate useless expenses and use that 20% to build assets.

Easier said than done, you say?

Did you know the average person in China saves around 30% of their annual income? In the United States, the average is a meager 2%!


2. Prioritize Expenses

Weigh the important of each expense. First spend money on things that are absolutely essential (that Gucci bag you're drooling over isn't one of them). Only then start to think about anything else.

Don't dip into the 20% you set aside earlier.

Ask yourself which is better — buying that expensive Gucci bag right now, or an apartment a little later? The property will make you rich — both with increase in value and rental income.

— Before you know it, you'll have enough for down payment

3. Emergency Fund

Financial advisors recommend you keep at least 3 months' salary stored away for a rainy day. The rich would beg to differ. They'll tell you sack away at least 6 months' income.

Life is unpredictable. You have to prepare for the worst — even if it probably won't happen to you.

In medieval Japan, the samurai pushed themselves over the edge — they relentlessly trained day in day out. Because they knew when the time came for battle, the opponent would be no match.

The 20% that you're saving from your salary, we'll start investing it only after an emergency fund has been set aside.


4. Invest — Get Rich Slowly

Successful people know getting rich isn't an overnight process. But they also know their money must work along with them.

Why should you bust your hump and your money just sits there in the bank? Make your money work harder than you!

The key is to diversify your risk.

The interest rate you get from a bank account is probably peanuts compared to the potential of other investments. When you hear investment, the things that come to mind are probably stocks and real estate.

We'll reveal some really innovative places to invest in future posts.

— Visualize your long term goals

Bonus Tip — Visualize Your Success

Set a long term goal on where you want to be in 5 years. Also set a smaller short term goal for the next 6 months. Now visualize them.

Visualize your goals everyday when you wake up. When you imagine having achieved your goals, you're more inclined and motivated to make it a reality. Every time you want to buy something, first visualize your financial goals.

Until next time...

Food Shopping Savings

(image courtesy of wholefoods.com)


Ah, the joys of food shopping! It has to be done. We need to eat. But how to do it efficiently? Being a couple without children right now, one of the hardest things we have found is not over-spending on food we may end up having to throw out because we haven't eaten it before it's gone bad. Having tried some things recently that have made a difference to our weekly food budget, (saving us at least £20.00 / $40.00 per week!) I came across this list below on msn today which reinforces some of the positive success we have found, and gives some other "food for thought" (I know, bad pun!). A lot of these are common sense, and also things you may be doing already, but I thought it would be a helpful reference.


Ten Ways to Save on your Food Shopping Bill

1) Make a list
If you find that every week your trolley is full of impulse buys, make some time to sit down and plan what you really need. This way there will be less temptation to pick up things you won’t really use. You may also discover items that you could live without, reducing your bill even further.

2) Grab bargains
You will usually find meat, bread and other fresh products reduced for quick sale just before their sell-by date. If you have a reasonably large freezer, you can freeze most fresh items for later. Just make sure you are buying items you will actually eat and are not just buying them because they are cheap.

3) Bulk buy
‘BOGOF’. No, not an insult, it actually stands for ‘Buy One Get One Free’. Supermarkets are very good at these offers and you can take advantage. Providing you’ve got the storage space, stock up when essential items like toilet roll, washing powder and beer are on special. Just beware of bulk buying items with a limited lifespan or that you don’t actually use that often, otherwise you’ll be wasting instead of spending.

4) Try own brand goods
Supermarkets produce a range of own brand goods, covering everything from pasta to tea. In many cases, you won’t notice the difference in taste but you will notice the difference in price. Basic items such as flour and rice are often produced by the same supplier as other ranges but just in different packaging. (as a note, we have experimented with this, but there is a taste difference in some things - whilst own-brand bread is fine, for example, there is a distinct difference between Heinz tomato soup and Sainsbury's own - it is worth paying a little extra if the taste is not great!)

5) Downsize
In many cases, smaller shops, and the farmers’ markets that are springing up every where, are cheaper and fresher than the supermarkets.

6) Cut down on luxuries
If you are really determined to shave some money off your bill, reduce the number of luxury items you buy, such as chocolate and alcohol. In many cases, this will cut down the pounds you spend in the shop and the pounds in weight you put on at home.

7) Eat seasonally
Foods that are in season are in more plentiful supply and therefore cheaper. Simple really. The Eat The Seasons website provides an up-to-date list of what’s growing right now and what you can do with it. You are also doing your bit for the environment as many out of season foods are brought in from abroad, generating a carbon footprint in the process.

Here's a look at the Eat The Seasons website

8) Grow your own
It is amazing how many vegetables and fruits you can grow in your back garden or allotment. From tomatoes to runner beans to strawberries, you can have the satisfaction of eating what you’ve grown.

9) Eat more veg
Meat is generally among the most expensive items on a shopping bill. Cut out a couple of meat dishes a week in favour of some seasonal vegetable meals and you will save. It may well turn out to be beneficial to your health as well as your wealth.

10) Use your reward points
If you don’t like theme parks, spa breaks or the other discounts the various reward cards offer, use your points to get money off your shopping. Pound for pound, it offers as good value as some of the other offers. Just don’t spend the money you have saved on items you don’t need later.

If you have any other tips, feel free to comment!

More Thrifty Cleaning Tips

Okay, I think I am giving away what is on my mind at the moment - lots of tidying up at my house! Ideal Home (UK) gave some great tips in this month's issue that I thought I would pass along, using things that you may already have to hand:

1) Sparkling Silverware - to clean off tarnish, line a pan with aluminium foil (shiny side up). Put in your silverware and sprinkle a tablespoon of bicarbonate of soda on top. Cover with boiling water and the tarnish will vanish.

2) Clean Upholstery - use a fabric softener sheet to pick up pet hair from upholstery. It's effortless and quick.

3) Pretty Candles - if your pillar candles are covered in dust, just pull an old pair of nylon tights over the candles and they'll be clean in seconds.

4) Spotless Iron - to clean the sole plate of your iron, turn the iron onto the highest setting, put a newspaper on top of the ironing board, sprinkle it with salt, iron the salt et voila! - an iron without any burnt-on spots.

5) Pristine Walls - have the kids been colouring on the walls again? Remove crayon marks by scrubbing gently with toothpaste, then wipe off and dry.

If you try any of these, leave a comment and let us know what worked!

When Life Gives you Lemons.....

Clean your house, concoct some beauty treatments, and make the most of this piece of fruit that, at only 20p (40 cents) in supermarkets, is a versatile fruit indeed!

For cleaning your house:

* cut a lemon in half and use it to scrub the inside of your bathtub! You can use both the inside and the outside of the lemon and it removes soap scum with ease and leaves a fresh scent, too. (in aromatherapy circles it is known that a lemon scent promotes happy feelings!)

* cut a lemon in half, place both halves in a bowl of water in your microwave and cook for 30 seconds. The steam generated from this process makes it easy to remove food and dirt when you wipe a damp cloth over the area. Plus again, you get a nice scent!

For beauty treatments: (courtesy of Canadian Living)

* Nail brightener: get your nails looking healthy and fade the yellowing caused by dark polishes with this mild buff 'n' bleach treatment

Recipe:
Juice of one half lemon
Baking soda

Squeeze juice of half a lemon into a bowl
Add enough baking soda to create a runny consistency (plus keep a little extra)
Dip nails into the paste. (Option: sit outside in the sun to enhance the action of the lemon.)
Let sit for five minutes, then add more baking soda to the mixture in the bowl to create a thick, crumbly paste. Rub gently into nail surface. Rinse thoroughly and follow-up with a hand lotion, rubbing it into nails and cuticles and pushing back cuticles with a cuticle tool if desired.

* Heavy-duty body scrub
Slough dead skin cells off your alligator zones: heels, soles, elbows and knees. Salt and lemon exfoliate naturally; honey has antiseptic and moisturizing qualities.

Recipe:
One handful kosher salt
Honey
Juice of one-half lemon

Mix ingredients to a pastelike consistency in a bowl, adjusting quantities to attain desired texture, then apply to your trouble spots with gentle circular motions.
Rinse thoroughly with warm water.
Moisturize afterwards.
Warning: Don't use this on broken or recently shaved skin.

This fruit also makes a lovely marinade for chicken when you add a crushed clove of garlic to it, and is delicious with a couple of dollops of honey in hot water when you're feeling under the weather.

A thrifty gift guaranteed to give a priceless reaction

Here is a perfect gift idea, not only for the person-who-has-everything receiver, but also for the budget-conscious giver. I made this for my husband as part of his birthday present this year, and it was hands-down his favourite gift (which was lucky, because he didn't get too much other fun stuff!)

It's basically a mini-scrapbook in the form of a "2 minute memory" card. You can find them at most craft shops, or else order directly from simple scrapbooks, and they have options for every relationship: husband, wife, Grandma, friend, etc. And you don't have to be a die-hard scrapbooker or even slightly crafty to put this together!

Each card comes with 10 prompt questions, such as "what do you treasure about your wedding day?", "if you could have one of your husband's traits, which one would it be?" "what object reminds you most of your husband?" etc or you can make up your own. It's fun to really think about some of your favourite memories together.

Then, choose 10 different pictures (if they illustrate your thoughts, all the better) and stick next to each piece of journalling on the adjoining page. You can embellish further with patterned paper, but I kept it simple with different coloured photo corners.

And voila - a small book that contains some fun memories and which will make your recipient feel so special. Priceless reactions....from a gift that costs less than £5.00 ($10) to make and a little bit of time to put together.

Blog books

So I just discovered the coolest thing. Okay…maybe it’s not new, but it’s new to me. It is www.blurb.com They actually publish your blog for you. The best part is they are very affordable and have great tools to work with. (Being a designer I’m kind of a snob about that).

For the last year or so as I have gotten further and further behind on my scrapbooks I’ve looked into some of these companies that do photo books (i.e. snapfish.com, Kodak.com and Heritage Makers) but I was either turned off because of the price or because of the lack of tools. With blurb.com they have a lot of really nice features, nice layouts, and some good editing tools.

So here is a little comparison of what I found (a little disclaimer… these websites all have different options when it comes to size of book but I just picked the standard size to do my comparison here) …

Heritage Makers — One of my friends became a consultant of Heritage Makers, they have it set up so you can have parties and invite your friends. They have a lot of different backgrounds and sizes of books, but the price is a little high for what you are getting. They recently redid their software so I’m not sure how the new stuff compares, when I played around with it before it was very difficult to get it to do the things I wanted it to do.

Price Comparison 8.5 x 11” hardbound book $69.95 for 26 pages. Additional pages $1.99 for 2 pages. Max pages 78

Snapfish.com — This one is probably my next favorite. It has some good options for photos. My one big problem with this one is the limit on captions (it’s something like 100 characters). Although I don’t like their photo books very much they do have a lot of other really fun photo gifts. When Todd’s sister was on her mission we sent her some notebooks with Hailee’s picture on them. She loved them (and notebooks are always something useful for missionaries). They also have really cute note cards a lots of other fun things. They do have a cute little pocket book that are 2.75” x 3.75” that would make really cute favors for a party or as little presents. (Afterall snapfish is a part of Hewlett-Packard so it’s got to be good right.)

Price Comparison 8.5 x 11.5” hardbound book $19.99 for 20 pages. Additional pages $1.99 for 2 pages.

Kodak.com — This one has a lot of good option (even a new Martha Steward line). It’s really similar to snapfish. So see above.

Price Comparison 9 x 10.25” hardbound book $29.99 for 20 pages. I can’t find where it says how much additional pages are.

Blurb.com … Okay so the things I love about blurb. They have lots and lots and lots of layout options. You can choose what fonts you want (and there are lots of choices). There are several backgrounds you can choose from. They also have a fun feature where you can enter your blog address and it makes your blog into a book (the other ones don't have that option). Importing pictures is really easy (the other ones you have to upload them to the web so it takes a long long time even with a fast internet connection). As a designer this is really the best software that I have found. Really user friendly and nice enough not to drive me crazy with lack of options.

Price comparison 8x10” hardbound book $29.95 for 20-40 pages. Additional pages go up by 40 pages at a time so for 41-80 pages it is $34.95 and when you get up to 361-440 pages it is $79.95. Here is their price comparison list.

More Budget Airlines, ATTITUDE Travel

Two years ago I spent a small fortune getting to Bucharest, Romania for a research project. Granted, I flew British Airways and we know that's NEVER cheap (but oh so nice). At that point, I had no clue about the many low-cost airlines serving Eastern Europe.

I recently discovered this great website that lists all of the budget airlines cropping up all over the place. They are organized by continent and then by country/cities they serve. There's even a section for low-cost transatlantic flights and apparently RyanAir will start service from UK to US in 2009 (although, I'm not sure how I could manage their miniature baggage restrictions for a trip to London).

http://www.attitudetravel.com/

If you're really adventurous, you might try hitching a ride across the atlantic...seriously:
http://www.airhitch.org/

I also frequently check these sites for hotel/attractions/restaurant advice:
http://www.tripadvisor.com/
http://wikitravel.org/en/Main_Page
http://www.virtualtourist.com/

Leaving on a Jet Plane

The world has never been smaller for our generation, thanks mainly to budget air travel! Just last week, I booked a trip for my best friend and I to Barcelona from London Stansted - the two flights and all the taxes added together came to £55.00! (approximately $100!) Bargain! Here are some of my tips for air travel on a budget:

* book as far in advance as possible - back in February, for Jonathon and I to travel to New York on BA for Thanksgiving would have cost us £448.00 (for two, including taxes); if we had booked last week, it would have cost us £660.00! A sadly significant increase! I'm waiting for FlyZoom to publish their autumn prices!

* if you can, travel during the week - not exactly condusive to saving holiday days from work, but flights are generally less expensive Monday - Wednesday

* be flexible on times of travel - "unpopular" times, such as early in the morning or late at night, can be less expensive and on offer for a longer period of time

* if you are flexible on your destination, research all options - airport taxes vary from airport to airport, thus increasing or reducing your final cost. Last week I discovered that, for the same dates as our Barcelona trip, we could have gone to:
Berlin, Germany - £74
Riga, Latvia - £78
Ebsjerg, Denmark - £84

All the flight prices were the same (0.01p each way!), but the airport taxes varied!

* Be sure to weigh up budget airlines versus the more expensive - although prices can be cheaper on a budget airline, airports servicing your destination can be much further out, thus incurring additional transportation charges in both directions. Double check you are saving money by travelling budget - if there is only a minimal saving, it may be nicer to travel the mainstream airliners and have convenience at both ends!

* sign up to your airline's newsletter - you will hear of special offers in advance

Of course, the bonus of flying inexpensively is that you get to see more places over time, and, more importantly, are also able to splurge a little more on accommodation!

Contemporary art for under a tenner !

Found some great little white pop-up blank cards in Muji, depicting Paris, London and New Yorks sky lines, as a simple cut out. Being 3 of our favourite cities I wanted to use them in our home so, I opened them out and pasted them into box frames ( that you can get in Habitat ) so they remained 3D and hung them on the wall. It's pretty effective. I'm always looking in the card sections of shops now for my next 'find' to be framed and hung !

Pottery Barn Area Rugs

Just before we went back to school we bought a condo and moved in. The dining room area was carpeted and with a 1 1/2 year old we new that wasn't going to last long. We couldn't afford to put in tile or wood floor so we decided to get a rug to go under the eating area. I love the look of the Pottery Barn rugs, but on a limited budget we really couldn't afford them. I ended up finding this website:

http://www.naturalarearugs.com/

They have beautiful pottery barn type rugs at affordable prices and if you watch they always have great sales. We found a great deal on a bamboo rug. (It's been almost 2 years so I don't remember how much I paid.) It been so perfect for us and it still looks brand new.

Introduction

A few things collided recently that made me think this type of forum is necessary:

* my husband and I had one of those scary "budgeting" chats!

* several of my friends had those scary chats with their husbands

* a lot of the blogs I was reading were being written by people my age and in my lifestyle bracket - but were featuring things that, no matter how pretty, fashionable, functional, would-absolutely-change-my-life-able they were, just weren't realistic for our newly decided budget.

That's where thrifty chic comes in - real tips and real experiences from real women in the same boat - raising children, planning their families and predominently living on one income - the kind of lives that are not featured in the weekly glossy magazines, but ones that we can all resonate with. The kind of lives that want beauty and excitement in them, at a fraction of the cost!

We hope this can be a place where we can share regular everyday examples of thrifty chic in action - not stinginess, just finding ways to be creative, innovative and contemplative with all kinds of things around us.