Generating Real Wealth Takes Discipline
“Think of how stupid the average person is and realize half of them are stupider than that.”
— George Carlin
I sure don’t want to be average. I hope you don’t, either.
Especially when it comes to your money.
Being Average Costs…
The Bureau of Labor Statistics recently released its Consumer Expenditure Survey on American spending and detailed how much of our incomes we spend on eight major categories. Take a look:
Everybody’s situation is unique but the one category I want to focus on is savings.
According to the BLS, the average American household saved $6,017 last year. It doesn’t break down where Americans put that money, but I’m pretty sure that most of that $6,017 went into 401(k) accounts.
Don’t fret whether you saved more or less than $6,017 last year. Instead, we need to focus on the percentage.
The average household made $78,635 last year, so that $6,017 of savings translates into a 7.6% saving rate.
If you saved more than 7.6% of your income, you are doing better than average.
However, if you are below 7.6%, you need to step up your savings game.
Generating Wealth Takes Discipline
Saving more means cutting back on something else, which is where knowing the average from the above chart can help you. For most of us, the “big three” expenses (after taxes) are housing, transportation and food:
- Did you spend more than $7,923 on food (dining out too much)?
- Did you spend more than $9,761 on transportation (driving more car than you can afford)?
- Did you spend more than $20,091 on housing (house-rich and cash-poor)?
According to the BLS, those three categories eat up over half (56%) of our income, so those are the three areas where you can focus your attention.
And that is especially true for food.
Eating Yourself out of Savings
The BLS reported 47% of the $7,923 we spend on food is at restaurants. This includes fast food, takeout, delivery, vending machines and full-service restaurants.
I get it… Eating out is not only delicious but convenient.
Trust me, I don’t feel like cooking after a long day at work either. But we’re talking about the self-discipline it takes to become an above average saver.
No one said generating wealth was easy. But you can do it!
Cutting back on food costs takes work but it’s simple and very effective for saving money.
All you have to do is cook more meals at home and brown-bag your lunch as much as possible.
And while I cringe at the $300, $400 or even more I spend at the checkout line whenever I make a Costco run, I do find myself saving tons of money.
And I would never suggest scrimping on quality, either. You can eat well, very well, at home for a fraction of the cost of any three-, four- or five-star eatery.
Don’t know how to cook? I’ll even help you there…
And while you’re waiting in line to check out, consider adding Costco (NASDAQ: COST) stock to your holdings.
As more Americans smarten up about saving, those checkout lines are sure to get even longer. And those checkout totals will rise even higher.
This makes it a fantastic stock and is why it’s up by more than 40% this year already. And did I mention it pays a $2.60 dividend?
The thing I want you to keep in mind is achieving financial security isn’t an issue of how much money you make…
As it is for the knuckleheads in Washington, D.C., who can’t balance a budget, the problem isn’t income (federal revenue totaled $3.3 trillion last year).
The problem is how much we spend.
Be an adult and spend less than you earn and your life could change in more ways than imagined.
And the easiest place to cut back is with your food budget.
Here’s to growing your wealth,