Have you ever thought about whether you could live on 50 per cent of your salary?
It’s not an idle question either. Not only is it possible, granted with a bit of a lifestyle tweak, but the rewards could be far reaching, be it altruistic, or otherwise.
Bill and Melinda Gates are well known for their committed to giving 95 per cent of their extensive fortune to charity. And it is a commitment that is being followed up by action. Interestingly, Gates’s very public plea to fellow billionaires, to give away half of their assets, is reportedly the result of his wife's reading of The Power of Half by Kevin and Hannah Salwen.
The Power of Half is a story about how the Salwen family downsized their home and gave half the proceeds to charity. Their message was simple, that anyone can have their own "half" project, be it small or large. And that it is possible to change your lifestyle.
Imagine the personal reward this approach could bring, whether it is for a local charity, being debt free, paying for a dream holiday, or perhaps having that level of comfort that comes from having money set aside for emergencies.
Here are some thought starters to one day make this happen.
Dual incomes? Live on one
Whilst some households have to live off one income when a baby arrives, why not capitalise on it whilst you are both earning.
Not only does this mean you can test out how you would cope if you do decide to have kids, you can build up significant savings in a time when you have the luxury to not be forced into it.
In debt? Get rid of it
Many households are in some type of debt. Imagine if you could be debt free and what a significant difference this could make to your lifestyle and quality of health. Whether you are single or in a couple forcing yourself to put 50% of your pay onto your debts is a sure fire way to quickly reduce them.
No savings? Get some now
Having an emergency fund is one of the most important things you need to ensure sound money management. Having a cash stash set aside means that if an emergency occurs whether it be illness, a natural disaster or losing your job you will have enough to survive.
Your savings may be for other items as well. Imagine if you could afford to go on your dream holiday without using your credit card or getting a loan and how much satisfaction this would bring.
The more you have the more you spend
It seems to be that the more money we have the more money we spend. This is most commonly on useless items which add no value to our lives. Think about yourself 10 years ago. You survived on much less then so why can’t you now?
A stress free you means a happier you
I don’t think I have ever met someone who hasn’t had some money stress at some point in their lives. This can have significant impacts on your mental and physical health, as well as your relationships.
By living off 50% of your salary, you can get rid of debt, and build your savings all leading to you being significantly less stressed. This will also be compounded by the fact that reducing your disposable income will probably lead to a simpler lifestyle.
So how do you go about it?
For some people living off 50% of their salary may not be financially viable and you may need to think of a smaller amount you could live without.
First work out your budget. Tally up all your expenses, look at the incomings and outgoings. It is amazing when you force yourself to look at your expenditure you will see all the stupid areas your money actually goes. Then start to cull. Anything that isn’t a necessity get rid of. Anything you could save money on like negotiating better gas, water and electricity bills do so.
Then find yourself a good savings account and set up an automatic payment on your pay day. If you can do this you will start your pay period knowing how much you have to last you. It also compounds the out of sight, out of mind philosophy-if it’s not there you won’t use it.
Finally watch it grow and see how you can achieve financial independence.
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Alex Wilson is the founder and editor of Savings Guide, Australia’s number one saving money website. For regular money saving tips, visit Savings Guide or follow Savings Guide on Facebook.