Dear Financially Determined,
I am hoping that you are happy today (and everyday).
My message for you today: Try to live below your means.
I know, I know…It’s much harder said than done! But it is the only way to move toward future financial freedom and end up in a better financial situation. You need as much money as early as possible to pay off debt and invest the rest. I know that it works, from experience. Contrary to what someone on the internet has suggested about financial gurus lying about how they got their finances into a good position, this is indeed something that I did for many years. (By the way, I am not calling myself a financial guru.)
My Story
When I had my first job, and had enough money to move out of my mom’s house, I stayed put, paid her rent (which was cheaper than having my own apartment), and used the leftover money to pay off my student loan, build my emergency fund, and to invest.
Later, when I got married, my husband and I lived off his income, and bought our first home based on only his pay. In fact, the loan officer said that we could afford a more expensive house. But, I suggested to my husband that we need to buy based on our comfort level, and not listen to someone who benefits from us taking out a larger mortgage. After considering our situation and keeping in mind that it is called “personal” finance, we came up with a plan that worked for “ us.” The early stage of our marriage, in which we did not yet have a child, allowed us to get our starter home in a town that had not-great schools, but at the same time was full of gorgeous Queen Anne and Tudor homes, all for a relatively reasonable price.
Along the same line, we have kept our cars for a long time. In fact, my last two cars were purchased only after my previous cars were totaled in accidents (by other people. Thankfully, nobody has been seriously injured.)
Perhaps you grew up only seeing the “more financially well off” versions of your parents. In that case, it might be a bit of a transition starting out living on a smaller budget as an adult.
Nevertheless, I have some suggestions for living below one’s means:
How to Live Below Your Means (Re: Housing)
1.Live off one income, but have more than one.
This means if you are single, get another source of income. When I was teaching in a regular classroom during the school year, I wrote curriculum during the summer and tutored on the side. If you are married, and both of you work, live off the equivalent of one income, invest the rest.
2. Live at home with your mom as long as possible.
(But don’t forget to pay your mom some rent. It’s called living below your means, not live-off-someone-else’s means. Who knows, you may be gifted with a surprise in the future, and be given some money back when you go to buy a house.)
How to Live Below Your Means (Re: Transportation)
3. If you need to buy a car, buy used.
Trust me, no one needs a new car. New cars lose value as soon as they are driven off the lot. I drive a pre-owned car. It is quite nice. It’s a 19 year old Mercedes Benz. I got it for a great price, and it runs well. I still get lots of compliments on it. Now, you might say that I didn’t need a Mercedes Benz. You’re right. But, by the time I bought it, I could actually afford it, and more. So, I decided to treat myself. I paid cash, and never looked back.
4. Challenge yourself to find ways to save money.
Try having a year-long free fun challenge, in which you challenge yourself to find ways to have fun for free. (As I always say…Free is my favorite price!) Go walking outdoors and use youtube exercise videos rather than joining a gym. Board game nights with friends is fun. And one particular thing about my daughter. She has never met a bookstore that she didn’t love. I raised her in both bookstores and libraries. However,she needs to have a temporary breakup with bookstores. Libraries are wonderful places, with not only books that you can borrow for free, but also free programs. Citizens should use them more. Afterall, we pay taxes to support them.
5. As your active income increases, initially, resist the urge to up your lifestyle.
When you do up your lifestyle, always keep it below what you can afford.
Once you are living below your means, you free up money to invest in your future.
Would you like to read more? Check out:
Spilling the Tea: How Will I Receive My Paycheck?
My 3 Streams of Passive Income
Key Takeaways:
Living below your means is a key way to have money to pay off debt faster, save and invest. You may need to get a second of income in order to have more money. When you do have more money, use it to pay off bills of necessity and invest the rest. Keep in mind that living below the means of your active income doesn’t have to last forever. But, the future you will be glad that you did this! You can do it! I’m rooting for you!
“Most people work just hard enough not to get fired and get paid just enough money not to quit”
– George Carlin
Confident in Your Success & Wishing You Happiness,
Rich Mom
I am not an investment advisor. Always do your own due diligence and research before investing. Check with your own investment advisor.
Also remember that past performance is not a guarantee of future performance.