Highlights in this issue:

*** Living in debt? All you need is a mental shift…
*** Pressed for time? Swop convenience food for this simple device and you’ll save hundreds of rands a year …
*** Making money “real” again will turn your spending habits around … and more…

-----------------------------------------
From the pen of Karin Iten

Dear Investment Academy Reader,

Lately, I’ve been thinking a lot about what it means to be wealthy. Everywhere I look the consensus is clear: The way to true wealth is to live below your means.

How do you go about this? Well, the trick is to live a comfortable, but not a wasteful, life. As Benjamin Franklin put it: “A penny saved, is a penny earned.”

But is it really as simple as that?

The truth is, living below your means is easier said than done – especially since, like any habit worth acquiring, it requires a mental shift.

Here are 5 effective ways to living below your means

Tip #1: Avoid prepared food
It’s no secret we’re all pressed for time. There simply aren’t enough hours in the day to get it all done. Yes, takeaways and ready-made meals can be tempting, but buying convenience food each night will end up putting a serious dent in your pocket. And not only do you pay for the extra convenience, but you also get a meal full of chemicals and preservatives too.

The trick: Once you learn to plan ahead, you’ll be surprised by how much time (and money) you can save. So why not buy a slow cooker and prepare tomorrow’s meal the night before? Just before you leave for work, switch it on. By the time you get home, dinner will be ready and waiting.

Tip #2: Never pay retail prices
You can easily save hundreds of rands a year on clothes by waiting for sales or shopping at discount retailers. But what if you need something now? The way to go is factory shops and yes it means you won’t have to skip the name brands either.

The trick: Visit www.factoryshops.gomommy.co.za. Here you’ll find the addresses and contact information of more than 280 factory shops in the country, including clothing stores Adidas, Billabong and Hip Hop, as well as shoe shops, cosmetic stores, food outlets and so much more. Who ever said you can’t be fashionable without breaking the bank?

Tip #3: Cut up your card
“Credit cards make money unreal,” says dumblittleman.com. Why? Because they take the thought process and discipline out of buying. Debit cards are no better. All you do is swipe, sign and “hey presto” you’re done. You may know what you’ve just spent, but do you know how much you have left? Unless you’re a conscientious mathematician, the answer is probably no.

The trick: When you pay cash and watch just how fast those bills disappear, you’re likely to be much more careful about how much (and on what) you spend. It’s like being a kid and relearning the value of money all over again. You’ll begin to question every purchase and that’s when you become really smart about your spending habits. So put away the plastic this month and see just how much you save.

Tip #4: Stop competing with the Jones’
A recent study posed the following question: If getting rich makes us happy, then do countries get happier as they grow wealthier? It’s a fair question and the answer will surprise you. Here’s what the study found. “As a country gets wealthier, there’s no overall increase in happiness. Why? Because they continually compare their wealth against that of others.” In fact, economies that encourage people to strive for more and more generally have a higher suicide rate than others. Fascinating!

The trick: Keeping up with the Jones’ is hard work. You need to define your definition of rich and make it work for you. And it’s why I’ve left my top tip for last…

Tip #5: Redefine your definition of rich:
My final tip comes from a reader of personal finance site www.frugaldad.com. It’s a real eye opener. “I remember sitting in a cubicle at my first professional job staring at a picture of a SUV I wanted to buy (and eventually did). Now, I sit in my office and look at the pictures of my kids. Just outside my window, I can see the beater I drive sitting in the company parking lot… What a difference a decade makes! To sum things up, my definition of being rich is having enough to meet my family’s basic needs, a few of our wants, and to be able to give some away to others.”

That’s the crux right there. Don’t live life trying to fool yourself into thinking wealth is measured by the material objects you own. If you don’t manage your money, it’ll manage you – and you’ll be stuck in debt forever.

Here’s to your financial freedom,

Karin Iten
For the Investment Academy