LIVING BELOW YOUR MEANS
Last night, while hanging out with our kids, the topic of money came up. I immediately try to hold myself back. I want to become this human waterfall of knowledge that just spills over like Niagra Falls! But I must withhold. What I find super interesting, they immediately turn away from because I am old and annoying. However, the topic of living below your means came up and they asked what that meant.
I explained it in very simple terms: “If you make $100 per month, you can spend $50 and you need to save $50.” I saw the wheels turning and refused to let my lips move anymore. They asked, why would I save so much? I explained that if they have $100,000 saved by the time they are 25 and they never touch that money again, not add or takeaway, then by the time they’re 60 they could have $1,000,000. Their eyes of course lit up at that number and they asked how? I explained in very elementary terms, you invest it in the stock market.
I then treaded so lightly as to explain that retiring early is an option and that if they’re smart with their money, it doesn’t matter what they do. Being a doctor doesn’t mean you’re rich if you spend more than you make. That some teachers could be wealthier than doctors just because of their spending habits.
I stopped talking, again. I waited for the wheels to turn. They did. More questions ensued and we kept circling back to living below your means. This is the most important aspect of personal finance. How can we do that? See below.
- Not buying a new car….ever.
- Only having one tv app subscription at a time. (This was my little brother’s idea. He told me he has one app and binges all the shows on the app he wants to watch, then cancels and goes to the next app, sometimes before the free trial ends!)
- Shopping for insurance at least every 3 years.
- Meal planning. Even if it’s just dinner, make a list of what you’re going to eat in the evenings and shop for ONLY those items.
- Enroll in your electric company’s savings program.
- Wash your clothes in cold and on the quick cycle, it takes less energy.
- Don’t buy bottled water. Invest in a filtering pitcher or system and reuse a quality bottle.
The list could go on. These are just a few items. Some are immediate action items. Some may take some time. Every $100/month you can save will knock of $30,000 you need in your retirement in the long run. READ. THAT. AGAIN. $100!!! That’s it! You can knock off $100 right now. Even if it’s just grocery shopping with a plan rather than a pang.
The goal here is simple, live on less than you make. You can do this.
