Spend unnoticeable amounts

When managing your finances, you have a choice: to spend first, and invest what is left over, or to invest first, and spend what is left over. Choose the latter: retain the bulk of your money for investing, and spend only that which will not noticeably retard your investments’ growth.

How much — exactly — can you afford to spend? Here is the simple rule: whatever you will not notice missing. If you will notice it missing, you cannot afford to spend it. For example, say you have $1.00 in pennies. How much could go missing before you notice? 8¢? That is what you can afford to spend: 8¢. The remaining 92¢ is for investing.

At first, this maxim may require you drastically curtail your spending. However, in time your net worth will compound and rise; soon, an unnoticeable amount will be quite a lot. Until then, be frugal and make due with less. Your sacrifices today will create a wealthier future tomorrow.