Keeping your expenses low sounds easy enough, but most people simply don’t do it. Human nature is such that people often aren’t naturally willing to make sacrifices. We feel that we have already sacrificed enough, so when given a choice we often won’t choose sacrifice, but any level of success requires sacrifice. It’s the same with athletes, success in business or a career, and financial success is no different. You have to focus on what is important, which is your future and your family’s future. Focus on that which you find true value in and don’t be afraid to live below your means. Think ahead of the future problems that might surface so that you will be prepared.
In the year 2011, at ages 28 and 27, my wife and I saved/invested 39% of our gross income. Do you know how we did this? We did it by making a decision ahead of time that paying for the future now was better than not being able to pay for the future when we got there. We made daily decisions to keep our expenses low, to live with margin. These are decisions like minimizing eating out, making cheaper food choices while at home, eating leftovers, not wearing the newest fashion, not having all matching furniture, and many more. We took modest vacations, never paid for cable, rarely spent money on entertainment, and kept the house cooler in the winter and hotter in the summer. These are all just daily decisions that are small by themselves but these add up to be a large amount of money on a yearly basis and even more over a lifetime. The biggest key to success in your finances is to consistently spend less than you make.
When there were opportunities to spend less we jumped at those opportunities. For many of our first years of being married eating out at restaurants was a special occasion. Like anniversaries, birthdays, or when one of our parents invited us out for a meal. They of course picked up the check. Extreme – Sure, But while eating out was great and delicious it wasn’t something we found tremendous value in. Therefore it wasn’t worth overspending money when money was so tight.
New furniture would have been nice too, many of our friends were doing it. But that didn’t happen in the early years either. Our furniture was literally all hand-me-downs from parents. It wasn’t the current style, It didn’t all match, but it was the right price – it was free. I distinctly remember one time we showed up at a friend’s house and the ladies were all talking about this new chair the host just purchased and the guys were talking about the new grill he just bought. Alison and I were not buying anything but throwing everything we had at our house payment. It was embarrassing at the time, I wanted to be those people. I wanted to provide for my family like I saw them doing. But they were a few years older and just seemed more successful than us. A few years later I found out that they were spending money that they didn’t have to try to keep up with the jones. It eventually came to a breaking point.
What about where to shop for groceries? All of us probably have lots of options near our homes where to shop. There are plenty of big chains with bright clean stores, great customer service, and therefore higher prices. There are also organic stores that are really popular and more expensive. We did our best to focus on those discount grocery stores like Aldi. Aldi is European-owned, less choices, and less customer service but prices are significantly cheaper. I was a little timid to go into one of these stores the first time, but I am so glad we did as it has saved us thousands of dollars.
Some of you might be saying, what about a date night? In those early years, our entertainment budget was close to zero. Most date nights involved cooking at home and watching Friends box set on a portable DVD player. We didn’t even have a tv for the first 7 years of our married life. After 15 years of marriage we have become a little more normal, we have TVs, but cable is still something we have never paid for. Modern technology and streaming services make it so much easier and cheaper than it has been in the past.
We were fortunate at a young age to learn these sacrifices early and apply them. Once young kids join the family it can become a little harder to make sacrifices in the food and utility department. Thankfully by the time we had children, we had already built a great foundation and we were able to ease up a little and provide some more comfort for the family and not be so aggressive with cutting expenses. But we still continue to prioritize savings and living below our means..
Take some time to brainstorm about your current life and what you can do to cut some expenses. When Alison and I first got married I was working full time, for $33K, and she was working very part-time. We were 22 and 21 and just trying to figure life out. After two months of being married and reviewing our expenses, we had a family meeting. The meeting went something like this: “We can’t afford much of anything right now. no more eating out, no more fast food”. That was what we tried to do to the best of our ability for the next year and a half. It became a joke at my office because I ate Ramen Noodles every day for lunch. It wasn’t funny to me, but they sure thought it was funny. In fact, for my birthday they bought me 5 cases of noodles to eat. The funny part is, the joke’s on them. They bought me lunch for almost 4 months. Now you might not be willing to sacrifice to this level, but what would it be worth to you? All those months of eating ramen noodles daily and we were still saving for our retirement and our future, we were still living below our means and even giving 10% to charity. All it took was a decision about what was important.
I am sure to many of you we sound totally insane and unrelatable. That sounds like a life without fun, a life you don’t want to live. That’s fair, but honestly, we never felt that way, I never felt like I was going without. I would make the same choices if given the chance all over again. Those are decisions that set us up, decisions that just a few years later made us millionaires.
I do think you can go overboard in this area and ultimately hurt your chances. Don’t live a total life of deprivation, don’t make life-altering changes to your life without having your spouse on board. The takeaway here is that it’s important to focus on building a life where you are content, where you have time and money for things you value. This can be financial independence, this can be eating out or it can be a combination of the two. Alison and I value margin in our finances and financial independence therefore this sacrifice wasn’t really a sacrifice at all.
Although I might be crazy, ask yourself how your retirement plans are going? You have to be willing to sacrifice in areas. So many people graduate from high school or college and they are so tired of being broke that they start spending 110% of their paycheck with the feeling that they have earned it. That is the wrong way to think. You earned the opportunity to go to work and make money, everything else is in your control. Your future starts here – with your daily decisions. Choose wisely.
Alison’s Thoughts:
I was pressure washing the deck this afternoon and had some music playing. A commercial came on for Starbucks (of course, we don’t pay for ad-free Spotify). The entire purpose of the commercial was trying to convince you that you DESERVED a Starbucks. If I had a hard day at work, I deserve a Starbucks. If I cleaned the toilets, I deserve a pedicure. If I survived a T-Ball game I deserve to buy dinner at Chick-Fil-A. Do any of those thoughts sound familiar? This mindset can become dangerous. Honestly, we all have hard days, but if I start to think I deserve to buy or spend because of it, my spending would get out of control. Of course, we buy Starbucks on occasion, we eat at Chick-Fil-A, and maybe twice a year I get a pedicure. The difference is I make a decision on if that purchase is right for me and if it lines up with our values and goals. I don’t deserve financial independence either, but that is our goal and what we value. That is what we are focused on and every purchasing decision flows through that filter.
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