12th September 2011: Saving Graces

Forget a high salary, the key to wealth is reining in spending…

It sounds strange to the less well off, but the rich stay wealthy by economising and saving.

William Randolph Hearst, the American media mogul, insisted his guests used paper towels, not linen napkins, when they dined at San Simeon, his hilltop mansion on the California coast – and successful property investors tend to be good savers, too.

In fact, the old rule of not spending more than you earn so you can invest what you save is a basic principle of financial management. But it's amazing how many people overstretch themselves or mismanage spending and income when they buy investment property.

Financial planners say even high-earning individuals have to be told that to get a nest egg, they first need to save.

And that means making budget cuts, such as choosing a second-hand Toyota rather than the latest European coupe.

Continue reading on how a good savings ethos can set you up for life on Domain.