A handy guide on how to progress from poor to rich

I often see people writing articles or books that teach us to spend a fraction of our monthly income on spending, a fraction on investing, a fraction on something or other. There are even, for many, people who keep a daily account in order to achieve this plan. I pay little attention to these figures because I have a set of principles in my head for the use of money. If you internalise these principles, you don't have to go through the trouble of dividing your income into smaller portions. Don't worry, you will have more money left over than you expected.

One

Saving money is the first step in managing your finances. I would say that before we accumulate a huge amount of wealth, if you can't make your first bucket of money overnight through your talent or opportunity, if you are just a person who works and lives by the book, mainly on your salary, then saving money is the first step on your financial journey and a necessary lesson in your journey to prosperity. Some people think that saving money is not financial management. They think that saving money is not financial management, but speculation, buying funds and buying a house is. No, saving money is a trickle-down process that adds up to a lot. You should not look down on this little drop, more can still turn the clouds into waves. Some people associate saving money with being stingy and think that people who save money are stingy and cheap. This idea is even more wrong. I believe that saving money is just a serious attitude you have towards money, especially, when the money saved can fulfil some of your wishes. It has nothing to do with the character of the person. It's like, must all poor people be cheap and all rich people be generous? Not necessarily! So, set yourself straight and look at saving money as the starting point for managing your finances.

Two

Some people think that saving money is not as important as making money. But I believe that the two are not really superior or inferior, but complementary and equally important. As a side note, we are not looking at the wealthy 5% of society, just the general public. Whether you're on a project commission or earning a dead salary, saving money is a safeguard for your rear end. Especially for people earning a salary, it is important that you allocate your income wisely and save the rest or reinvest it in other financial plans. This is using some sort of tool to help you save money. I often see people writing articles or books that teach us to spend a fraction of our monthly income on spending, a fraction on investing, a fraction on something or other. There are even, for many, people who keep a daily account in order to achieve this plan. I never bother with these figures because, in my mind, I have a set of principles for the use of money. If you internalise these principles, you don't have to go through the trouble of dividing your income into smaller portions. Rest assured that you will have more money left over than you expected.

Three

Here are some of the ways and principles I use to save money.

1. Put yourself in chains.

You must know what I mean. As I mentioned in "Ten years of accumulating ten million dollars in property - a planned life, like a slow cooker, will always be tasty", buy a house within your current reach and pay the mortgage every month. Remember, I'm talking about what you can afford. It's up to you to decide how much you can afford, and I've given advice in the article above. If you can't afford a big house, buy a small house, or a shop with investment value. Even today, after more than a decade of real estate fire, there are still valuable real estate properties to invest in, although prices are already high and although there has been a collapse in some places. It all depends on your vision and drive.

I know a friend who, a few years ago, carefully researched each of the underground lines under construction in Beijing. He finally selected a commercial property near one of the planned stations and invested in a small area of shops. Today, after the warm-up period of the shop, the monthly rent is 12,000 yuan, which far exceeds the monthly payment. Today, Beijing's metro lines are still in full swing, many other cities are building metros and many major infrastructures are underway. Be a committed person and you will always have the opportunity. If you really can't afford a big purchase like a house at this stage, then go ahead and get yourself a fund fixed. You have to put a certain amount of money into it every month. If you don't save it in, the interest earned upfront will be wasted. This approach will keep your reckless spending in check and get you into good habits.

If you are successful in getting a mortgage on a piece of real estate, then you need to be clear-headed in your choice of bank. Ask beforehand about the interest rate discounts or repayment policies of each bank you can choose from, and then make your own choice. You can also contact the bank yourself and don't listen entirely to the recommendations of agents or other people. It's best to choose a bank with the lowest interest rate and the ability to pay off your loan as early as you want, and then use the ant repayment method. Most banks do not allow early repayments until after a year, or even worse, only 2-3 times a year. You must think carefully about why your bank stipulates this and thus you can see how important my advice is. Because it means that for a year after you start repaying your loan, you are only eating interest for the bank for nothing. And that year happens to be the year with the highest interest rates. So, if possible, choose a bank that doesn't have a one-year limit on how long you can take out a loan. We chose Minsheng Bank for our first house purchase and it is readily repayable. And there is no limit on the amount. My first early repayment was only 20,000 yuan. After the switch, the monthly payment was reduced by 80 yuan. Don't look at the 80, but since the principal is reduced, the next time you repay 20,000 yuan, the reduction in monthly payment will be more than 80, and so on and so forth, your monthly payment will be reduced more and more.

As for the repayment methods, there are two types of repayments, equal interest and equal principal, which I have talked about in "10 years of accumulating 10 million properties ~ a planned life, like a slow cooker, will always be tasty", so I won't go into it here.

My approach is that I am not afraid to go through the hassle of running to the bank and paying it off as soon as I have enough tens of thousands on hand. Why pay it off when you have it, rather than saving up the whole amount and paying it back? Because it saves a lot of interest. Think about it, the current call rate is 0.35% and the loan rate is 6.15%. 50,000, sitting in your card for a month, is only 50,000*0.35%/12=15 bucks in interest. And by giving it back to the bank, you will save 50,000*6.15%/12=256 in interest. Rolling slowly in this way, the ant repayment can save you a significant amount of interest payments.

What's more, as you watch your monthly payments continue to decrease, the pressure of debt will be transformed into a pleasant sense of achievement, your confidence will be boosted and you will be more motivated to repay your loans.

2. Adjust your spending concepts and manage your spending habits.

Form your own evaluation system and be an intentional person in life. Probably because I work in an economics-related job, I usually have a natural concern and understanding of prices and the economy, whether I'm shopping or watching the news. In other words, I am aware of the environment I live in. And then there are the spending habits. I don't go with the flow of things, I start from my own needs and I look for value for money that I agree with. For example, mobile phones. My lover and I have not used an Apple phone in all our years. In our eyes, a 6,000+ Apple phone compares to a 3,000+ Huawei high-end phone, which can meet all my needs perfectly and costs half as much. And then there's buying clothes. I still buy clothes that are simple, generous and practical, and generally don't go for clothes that I don't have the occasion to wear. I remember once seeing a dress that cost over 3,000. At first I liked it so much that I almost paid for it. Then I thought about it calmly and realized that I might not even get a chance to wear this dress once when I bought it home. The value of a dress is only as good as the person who owns it. You hang it in your closet and even the most expensive garment has no value anymore. Besides, fashion changes quickly and when it's no longer new, the price goes way down. So, I didn't hesitate to go. And take a taxi. I rarely take a taxi, I like to walk and take the bus and metro. I don't like taxis. On the one hand, I get seasick particularly easily in taxis, and on the other hand, taxi drivers work very hard and sometimes sleep in their cars, so the air is worse. So, I prefer to walk, or take the bus and metro, which not only keeps me on time, but is also environmentally friendly. After a long time, I don't think I am suffering, but I feel more comfortable this way. Then, there are other items. I choose between a 2,000 branded bag and a 400 ordinary bag, and between a 4,000 imported branded air purifier and a 1,000 ordinary domestic air purifier. I don't have conclusive evidence that imported air purifiers are necessarily better than domestic ones, I just have my own judgment and consumer vision.

3、Appropriate hoarding

Surrounded by all sorts of disconnected essentials, we sometimes hear the word hoarding and there is inevitably a natural resistance to it. However, I would like to say that proper and selective hoarding can help you save money. For example, when your family or yourself go abroad, if time allows, stock up on items that you commonly use, such as cosmetics, cigarettes and so on. Because these things are really so much cheaper than at home. However, I would still like to emphasise one word: moderation. Cosmetics generally have a lifespan of 2-3 years. So, the cosmetics you stock up on will be enough for you to use for 2 years. If you go abroad frequently, then you can stock up even less.

There are also some websites where you can stock up on daily necessities such as shampoo, laundry detergent, toilet paper, etc. when they have events on special days. It's still a good deal, especially on holidays like Double 11 and 12, which are created by e-commerce.

There are also good quality discounted items that you come across unintentionally, which you can also hold back. The premise is: good quality and useful. For example, once I was out on an errand and happened to pass by a foreign language bookstore. It was having a sale on a large selection of lovely foreign-designed children's books. They were in plain English, well made, stylishly designed and beautifully packaged without any tears. The price at the time was half price for the sale. I was surrounded by people who had babies. It was the very best gift for children. So, without hesitation, I immediately bought several thousand books and carried two large bags home. In later years, I gave these children's books as gifts to many of my friends and colleagues around me one after another. They were all very complimentary. Some people even mentioned my gift years later, saying how much the baby loved it.

Of course, I would like to emphasise that you should always buy something that is useful to you, not just something that is cheap and useless, as that would be a loss of money. I know a lot of young girls like to buy little things like cups and notebooks. But buying more is a waste of money and a chore as it takes up space. In fact, this is a psychological phenomenon, called the "lipstick effect"

The "lipstick effect" is an interesting economic phenomenon. In the US, whenever the economy is in the doldrums, lipstick sales go through the roof. Because lipstick is considered to be a relatively inexpensive consumer product in the US, in a recession people still have a strong desire to spend money on cheaper goods. Lipstick, as a "cheap non-essential" item, can be a "comfort" to consumers, especially when the soft, moist lipstick touches the lips. Furthermore, the recession will make it difficult for people to save up for "big things" such as buying a house, a car or travelling abroad, so they will have some "spare money" to buy some It is difficult to save up for "big things" such as buying a house, a car or travelling abroad.

This theory can partly explain why some people like to keep buying all kinds of small things that are not very useful. If you understand the psychological reason behind this. Then, forget about the little things and start saving money. A planned and disciplined saving and spending habit will lead you to the end of happiness in the end.

4. Organise your available resources wisely.

In the past, due to my work, I used to receive some gifts from clients from time to time. They weren't particularly expensive, but they were usually beautifully packaged. When I received these gifts, I usually didn't open the box to look at them right away. I really don't have the slightest curiosity in this regard. If there is something inside that I can use but currently have use for, then I will never throw the old one away to open a new one. I usually store the new ones in a safe place. Then at the right opportunity I give it to a friend or relative who needs it. It's a great way to get rid of inventory and make a little personal investment for myself.

Of course, this is only for these unemotional gifts. If it's a gift from a friend or relative, that's a different story. Those are never to be given away again. I will always keep them safe and use them carefully.

5. Make good use of credit cards.

Some people worry that owing money will affect their credit. In fact, by linking your bank card to a debit card, the bank will automatically pay it off each month and you will certainly not be late. Some people worry that using a credit card will go over their budget. In fact, as long as you have developed a good concept of spending in accordance with what I have said before, you will have moderation and will not be limited by the form.

6. Rely more on yourself and use less services.

Try to eat at home as much as possible. Eating at home is a very economical and healthy way to eat. I strongly advocate it. Eating out is unhealthy, unhygienic and particularly expensive. Of course, there are many young people who work far away from home and are not in a position to cook for themselves. So, if you can't do it on weekdays, why not make your own meals on weekends anyway? Another thing is to do your own housework. Over the years, hourly workers have become both inexpensive and popular. But my family has never hired an hourly worker. On the one hand, we are still used to doing our own work and cleaning our own little home. On the other hand, we are not used to having strangers come to the house to clean. This way, two people can cook and clean the house together, which improves the relationship and saves money, so why not? Then there are the trips out. So far, we have travelled, almost exclusively on our own. If you'd like to take a look at my previous travelogues, you'll be able to see how enjoyable and rewarding it is to plan and implement our own trips, although we need to do our homework in advance, and of course, avoid unnecessary expenses.

7. Foster the concept of environmental protection.

Both of our families grew up in poverty and with the word waste simply not in our heads. Now that we are grown up, we can actually afford to be extravagant with many things. However, the idea of environmental protection is so ingrained in my mind that I cannot ignore it and go along with it. For example, I use water sparingly, including when I go out in public places, and I never use it wastefully. The same goes for electricity, turning off lights as I go. I would rather wait a few more minutes for a separately controlled lift in the building than press the lights on both at the same time. And paper towels, we even used to share a single paper towel. Even in public bathrooms, when I wash my hands, I don't tear a large amount of paper to wipe my hands, but rather let it dry on its own. This has become an internalised habit. Our planet is becoming increasingly overburdened. As little as we can do, I hope everyone reading this will be a little more environmentally conscious.

After all the talk about saving, there are a few things that cannot be saved.

One, the necessary expenses for parents, both spiritual and material. Even if you are not so financially well off, this is not something you should cut out. Don't wait until your son wants to raise his parents!

Secondly, invest in yourself. You have to spend money on books, studies, and fitness, and you can't save on this at all.

Third, things that make you feel good, such as travel, such as watching a movie you particularly want to see, eating a delicious Japanese cuisine. Of course, there are limits to everything, and it's better to have moderation.