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No one likes to be told that they’re wasting money.
It hurts to be told that the thing you’re doing is stopping you being rich, and it offends us all to be told what to do with the money we have made for ourselves.
I totally agree, and I put those words in quotes because I could just as easily have said them myself. Not just before being a Seven Dollar Millionaire but right now, today, I could say them too.
So read the data below as information only – click on the words to see how much money average Americans spend on the seven big wastes of money (but every country is pretty much the same!).
They’re killing you and wasting your money. The average American wastes more than a dollar a day on these things, but if you are an actual smoker, that might be nearer $5 or even $10. Stop it and save.
Another day, another drink, another dollar (at least). Put that money to one side and save it,and save yourself the hangover tomorrow. Again, that would be a dollar on average for Americans.
This is the big one. This is where Americans spend at least $8 a day, a cost that could easily be halved if eating from home. $8 is more than it takes to be a millionaire. On average, Americans could all be millionaires if they didn’t eat out.
Doesn’t just have to be alcohol. It could be fizzy drinks, juice, smoothies, or even just a bottle of water. Here again, Americans spend an average of $2.50, money that could get them more than a third of the way to million-dollar savings.
Are you still subscribing to some kind of TV service, be it cable, satellite or online? Most things you really want to watch are available for free or at extremely low cost, and you could be spending a dollar a day on these items.
We all need a phone with data, don’t we? How else are you reading this? But we don’t need to spend on all of the extra features, many of which we never use. For example, surveys estimate that Americans waste a dollar a day on a landline that they never use.
Hey, no article about saving money would be complete without criticising spending on the all-important latte. Whether it’s a $3.50 long black or $5.00 flat white, that is a more than half a million dollars of saving right there.
And it doesn’t stop there. The average Brit and American loses about a dollar a day gambling (Aussies lose more than double that much).
Added up, the average spending per adult in most developed countries on the times above add up to about $20 a day, almost three times the amount anyone needs to save to become a millionaire under the Seven Dollar Millionaire plan. If you are doing all of these, and you could save that $20 instead of spending it, and invested it for 7% returns, you would be a millionaire in just 35 years.
This might not tell you where you’re wasting your money though. Only you can know that. And what some people think is a waste, other people think is the best thing ever.
Ramit Sethi has a great concept called Money Dials that explains how all of us need to spend on something, but we can cut back on other stuff other people think is important. Some people want to spend on holidays, others on food, others on clothes.
Work out what spending item you want to keep – consciously – and then work out which of the others are your big wastes… or at least waste $7 a day that you could otherwise save.
Featured in the FINANCIAL TIMES, and the DAILY TELEGRAPH, our MISSION is to help create millions of millionaires. We want people all over the world to use our simple tools to save emergency funds, turn those into investment plans and create the habit that will help enrich their lives.
If you’re interested in financial literacy, please also look at our new project www.maiawards.org