Small concessions on the day to day stuff can lead to big money in the bank. A new survey of the financial habits of Gen Xers and Millennials reveals what the most well-off of them are willing to sacrifice right now in order to maximize their savings for the future.
The team at Principal Financial Group identified the spending behaviour of a sub category of these groups that they call “super-saver.” These are people who contribute the maximum to their retirement plans every year.
How do they do it? Living modestly. They tend to drive older cars, they live in modest homes or rent apartments, and they prioritize hard work and long hours over time off.
Five ways the financially well-off build their wealth
Drive older cars. Nearly half (47 per cent) say that they drive an older vehicle in order to cut costs and put more into savings.
Live in modest homes. Again, almost half of the ‘super-saver’ group (45 per cent) say that they choose to live in a more modest home or (especially for Millennials) rent rather than buy, in order to save money.
Cut back on vacations. They say that they do not travel as much as they say they would like to, so that they can bank the money instead.
Work hard. Forty per cent of the financially secure group say that they tolerate high-levels of work-related stress because it is worth the money.
Work long. More than a quarter of them (27 per cent) say that they also work extra long hours sacrificing time with friends and family in order to make more money.
“These ‘super savers’ are incredibly driven. We see them making sacrifices to achieve their goals, and sometimes that includes delaying milestones until they feel financially secure,” said Jerry Patterson, senior vice president of retirement and income solutions at Principal. “Whether it’s driving an older vehicle or working extra hours, these individuals have said ‘my future is important, and I’m going to save to make it great.’”
Other small sacrifices you can make to bank more cash every month
Cut the cable. Cable television packages are expensive and unnecessary. You can stream anything you want to watch off the Internet (except maybe live sports events) and it’s (mostly) legal. Here’s how.
Pack a lunch. Buying lunch at work easily costs $10 and can run up much higher. Even at $10, you’re still spending +- $200 a month. That’s $2,400 a year that could be in the bank earning interest rather than going to shawarmas and premade sandwiches.
Make your own coffee. It can be a status symbol to line up at the trendy coffeehouse and order your favourite blend. But is it worth the money? You can brew coffee to your precise taste at home and take it with you in a travel mug for a week at the cost of a single cup from Timbucks or Starcup. (And it will increase your lifespan by the same 9 minutes as the takeout stuff.)
Want to stop living from paycheque to paycheque? The solution for the people who’ve built up wealth seems to be the willingness to tolerate hard work and long hours, and to cut back on unnecessary spending wherever possible in order to put more money in the bank.