Male businessman

The Five Word Start.

‘Spend less than you earn’ – you’ve probably heard that before. Maybe even in your English lessons if you read David Copperfield. Let’s break it down.

1. Spend Less

Spending is the key. Spending is something you can control. Earning – at least in investment terms – nearly always depends on someone else like your boss, your bank or whatever. If you start with saving – no matter how much – you are in charge.

2. Size Doesn’t Matter

Small savings add up. If you spend $10 a day less than you do now, you’ll have $3,650 more at the end of the year. You’ll have even more if you get some interest on those savings. If you earn a few million a week but spend a few million and a bit, you are in as much trouble as someone who earns $100 and spends $110.

3. Start Now

It’s a trap to delay saving until you earn more because you can’t be sure of the future. It’s an even bigger trap to chase apparently high-earning investments (lottery ticket anyone?) in the hope the payoff will look after you.

4. It’s About You

You have to build your own plan. What works for your mate might work for you but there’s no point in using someone else’s plan because to successfully save, you have to work out what you want to save for. If you have a savings goal and an end in sight – car, house, trip etc. – you’ll find it a lot easier to save.

5. Get Advice

No one has all the answers, but the best advice is going to come from people you trust, reading a lot and probably from a professional. But the rule here is, keep your ear and your options open, search around and seek out what could be best for you.