Achieving Financial Success Without Excessive Frugality and Huge Income
It is not hard to find stories in the media about seemingly ordinary people who have achieved great financial success. You hear about what seems like an ordinary guy or girl who worked what seemed like an ordinary career path, and somehow they have a million dollars in the bank. How do they do it?
This post was originally published on The Simple Dollar .
Unfortunately, many of these stories have additional details that you don’t read about in the headlines. Often times, you will find that these people have practiced a level of frugality that seems like complete misfortune to you. They live in a very tiny house, or they have a very strange diet, or they never leave the house, or they do housework for all their nutritional needs. Sometimes you will find that while their job is normal, they actually made a ton of money, either from an above average salary or some other financial gain (like inheriting some kind of inheritance).
At this moment, the walls are crumbling. Instead of arguing that anyone can do it, they reaffirm the idea that financial success is something that is achieved only under exceptional circumstances.
I am here to tell you that it is actually quite possible to achieve financial success without extreme frugality, without a lot of fortune already in the bank, and without a huge salary.
From the very beginning of our professional life, my wife and I never received more than about 25% above the average American salary, except for one year, when I almost drove myself to a mental breakdown (never again …). We don’t make a ton of money. We also have three kids at home, and anyone with kids knows they’re money holes, so we don’t have any extra money either.
At the same time, we are not too frugal. I try different things to experiment with in my writing, but in our day-to-day life, I by no means consider us insanely frugal. We eat normally, we have normal hobbies and normal lives.
However, over the past decade, Sarah and I have paid off two five-digit car loans and then eventually replaced those cars and paid for them in full. We paid off our student loans, which were five-figure for each of us. We also paid off a ton of credit card debt, also measured in five digits. We bought a four-bedroom house and then paid in full for four years. Right now, we have no debt – not even mortgages – and we are saving money to actually retire early .
How is this even possible? This is possible through the use of several very clever strategies. The rest of this article is a basic outline of what we’ve done.
Focus your lean efforts on things you don’t care about (or care about)
People have the false impression that frugality is all about deprivation . When people think about frugality, about cutting their costs, the first thing that comes to mind is the costs in their lives that they really care about.
Think for yourself. When I suggest cutting your costs, what are you thinking about? It’s incredibly likely that most of your immediate thoughts boil down to things that you get a lot of personal enjoyment from (with a few of your worst spending mistakes added, for good measure).
This is a completely reverse approach to lean. This approach is almost guaranteed to fail and guaranteed to fail. You simply won’t be able to cut your expenses if your cost-cutting lifestyle deprives you of what you love most in life.
The truth is, real lean success comes from cutting down on what you barely notice and then not spending the money you save, but instead spending it on something financially positive. This is due to the fact that you are doing things like sealing your home so that you don’t waste warm air during the winter months. This comes from things like buying hand soap from the store and laundry soap. This is due to things like putting together a shopping list before going to the grocery store. This is due to the negotiation of the best insurance package. This is due to the fact that you are getting closer to work so that you do not have to drive your car every day.
If you really love that perfect morning coffee, it doesn’t have to do with stopping at a café. This does not come from completely abandoning a favorite hobby. This is not because you are alone at home while your friends are having fun. These are unrealistic visions based on a fear of change, change that has nothing to do with an effective lean approach that really pays dividends.
Use this approach when browsing through large lists of tips to save money. Don’t make those that sound like they will make your life less enjoyable. Instead, focus on those that seem almost easy and those that, when you think about it for a second, you realize it won’t make much of a difference. Focus on those that do one big task ahead of time and then continually cut back on the bill. This is effective frugality. This is what will last. And honestly, it’s pretty fun because you realize that you are making small changes in your life that will bring better long-term results.
Learn to cook well enough to eat comfortably at home
Food is such a huge drain on the budgets of many families simply because of the huge difference in the cost of restaurant meals versus home-cooked meals. The difference between the two is astronomical , and when you repeat that cost difference multiple times a week, it really adds up.
Believe it or not, the average American family today eats more than at home, even with such a huge difference in prices. Why? There is an opinion that eating outside the home is much more convenient than cooking and eating at home.
In my experience, this perception is based on a lack of comfort that many people experience in the kitchen. Cooking decent food seems intimidating. Even preparing a simple meal can seem daunting. When you’re scared, your mind increases the complexity of the work to be done, and when your mind begins to increase the amount of work to be done, eating out seems much easier, which makes up for the difference in cost.
How to overcome this perception? You do it by actually gaining experience in the kitchen, and you do it by actually forcing yourself to cook a lot of food at home.
Every time you cook food at home that you would otherwise eat in a restaurant (or take-out or delivery), you will save a little money, but more importantly, you will become a little more proficient in food preparation. kitchen.
Something like making poached eggs and making coffee, which could seem like a tedious task in the morning, becomes something you can prepare in preparation for the new day. Something like a beef stew might seem like a huge problem, but you soon start realizing that you can just chop up the ingredients the night before in about ten minutes, toss them all in the slow cooker in the morning, and go home to finish. beef stew after work.
As this transition takes place, the intimidation factor in home cooking will become lower and lower. Coming home and preparing even a fairly complex meal will not seem tiresome. And believe it or not, it’s actually easier to go home and make something simple like a pot of pasta and sauce than to go to a restaurant.
This turns eating out (a relatively expensive activity) from a crutch you have to rely on for a week to an occasional treat you use to enjoy an unusual meal.
Don’t waste your food
It often amazes me how much food is simply wasted by many families. They will buy something from the store, leave it in the refrigerator or on the counter until it goes bad, and then throw it away. They buy a product, put it in the closet, and then when they find it again, they think it’s “spoiled” and just throw it away. They will pick up leftover food, stuff it in the refrigerator, and find it with a thick layer of mold a few days later.
This is all wasteful.
Here’s a new approach. At the beginning of each day, check the refrigerator and see if there are any leftovers you can eat today instead of cooking. This turns one of your meals into a freebie and ensures that you don’t end up throwing food in the trash can. At the beginning of each week when you’re planning your meals (which we’ll come back to in a minute), look into your pantry and freezer and use that as a basis for your meal plans. This way, you really don’t have to buy that much at the grocery store. For a bite to eat, take a look at what’s in the fresh food area in your home – is there fresh fruit in the fruit bowl? Are there fresh vegetables in the chips?
These steps alone will help you get rid of a lot of food waste that your family is exposed to. Remember, when you throw food in the bin, you are literally throwing away money. This food is worth something to bring to your home, and now you just throw it away. Try not to do this.
Reduce the number of treats until they become treats again
Humans are routine-oriented creatures. We often find ourselves in the daily routine and weekly, which we repeat over and over again. We usually do them without thinking or feeling – this is just the norm.
Every time you spend money on this daily or weekly schedule, you have to wonder if it’s worth it. Are you really getting real value from these costs?
What you may notice if you seriously ask this question is that there are many things in people’s daily lives that are not really necessary. In fact, these are treats. Think of your morning Starbucks coffee rather than a coffee pot at work. Consider stopping regularly at a hobby store.
When you do this often enough, it stops being fun. It becomes a routine. When something becomes a chore, it not only becomes a necessary expense in your life, but it also loses a lot of fun. It stops being fun and just becomes “normal.”
One of the best “thrift secrets” out there is that life is actually much more enjoyable if you make your “normal” routine as inexpensive as possible and then spice it up with heals at sufficient intervals so that they actually feel like heals.
So make a daily stop at Starbucks and distribute it to become weekly or even weekly. Instead, get your morning coffee out of your shared cup at work.
Here’s the weird thing: you’ll actually start to find that drinking this drink once a week or two turns it into a treat. This will make the cup much more enjoyable than it used to be when it turned into a boring routine.
Keep your routine simple, then add treats in moderation to make them real treats and not just boring chores. You will spend a lot less money, and treats will bring you more joy and pleasure than before.
Be organized in your thinking and planning every time you spend money
It’s simple: whenever you think about spending money, think ahead and plan a little.
When you go to the grocery store, first make a meal plan and make a grocery list based on it. That way, when you do go to the store, you have a list to follow.
When you go to a bookstore, think ahead and decide what exactly you are looking for as precisely as possible. Thus, when you go there, you are not just wandering.
Don’t put yourself in a situation where you will spend money without thinking about it in advance, which means that you will not be carried away by the moment of purchase. Think about your shopping list at home and write it down, rather than thinking about what you buy on your way to the store.
This does not mean that you cannot spontaneously manage money. It simply means that if you are going to be spontaneous, you have already set reasonable boundaries for this so as not to ruin your finances.
For example, if I am going to spend an unscheduled evening with friends, I will think about that evening in advance and take enough cash to spend a reasonable evening in the city, not a credit card that can open the door to the city. a huge amount of impulsive spending, far beyond what I can afford. If I take $ 40, it means I thought about it ahead of time and I know that I can feel completely normal spending that $ 40, as much as I would like, and I still know that everything in my life is still on a right way.
Intentionally move your hobby from hobbies to pursuing
When you are passionate about a particular hobby, it is easy to fall into the trap of accumulating hobby-related stuff instead of doing something as part of that hobby.
For example, if you are an avid book lover, you can often create a huge collection of books rather than, say, read books.
This is a reflective trap that many people fall into when their lives get busy. They begin to realize that they don’t have time for the hobbies they once loved, so to combat that perception, they instead buy items to replace that time.
Here’s a much better approach: plan blocks of time to actually practice your hobby. Place them on your calendar first, before other appointments, and in fact keep this time sacred.
Give yourself time to read if reading is your passion. Give yourself time to play board games if board games are your passion.
That way, when you’re tempted to make a purchase, you can instead look at that length of time and think about the actions you are actually going to do, rather than the things you just accumulate.
You will find that when you do this, your desire to accumulate things actually melts away. For example, the time you might have spent thinking about all the books you would like to read instead turns into time you wasted thinking about the book you are about to read this weekend. In fact, possession of this book becomes secondary, and this makes things like stopping at the library much more attractive because the library is focused on usage rather than accumulation .
Always question every purchase
The last few articles are really just a few examples of this general strategy, which really summarizes what Lean Thinking is. You are simply questioning every purchase.
This does not mean that you stop spending money. It simply means that when you are about to spend money, you critically ask yourself if this purchase really makes sense, and after you have made a purchase, you critically evaluate that purchase again and see if it really makes sense by looking back at It. …
A financially responsible mindset accepts these situations and constantly replays them in my head. Whenever you are driving or sitting in a doctor’s office, or whenever idle thoughts arise in your head, you are simply analyzing a few recent purchasing decisions or some purchasing decisions that may arise. Do they make sense? Is there a better way? Can I just borrow this item? Can I buy the brand from the store instead?
You find yourself starting to cut your expenses. You start to see unnecessary expenses as unnecessary.
At the same time, you find that you are not giving up on the things that really matter to you. If you take the time to think about your purchase, after a while it will really become clear which purchases are truly beneficial to your life (and you are not cutting them off) and which are not.
This is the purpose of such thinking. This cuts your expenses down to the things that really matter.
View your career as an opportunity, not an obstacle
Many people look at their careers as hard work. This is what makes them do life, and they hate every minute of it. They try to avoid really a lot of work and try to do the minimum necessary for their work.
This is a misconception and must be completely replaced if you are to achieve lasting financial success.
Instead, see your job as an opportunity. Don’t live to work, work to live . The time you spend at work is the time spent getting you to be able to do what you want in other areas of your life. The time and energy you put in there comes back to you in terms of financial security and the ability to do whatever you want in life.
Moreover, this is an opportunity to open up even more freedom.
Look, if you’re going to work eight hours anyway, why not use that time deliberately to maximize every possible dollar you can make from your job? You can do this simply by tackling challenging tasks. Look for situations in which you can challenge yourself at work. Look for opportunities to get free education. Look for things that can strengthen your resume and provide a great job overview.
If it is not appreciated in your workplace in terms of higher wages, so what? They are great resume material and you can always look elsewhere when your resume starts to look really good. You may even find self-employment opportunities, such as freelancing in your spare time or starting a small business.
Just look at the hours you put into your career as a worst-case exchange for what you have in life and, ideally, as an opportunity to improve your income and make your path to financial success much faster.
Treat these changes as your new norm.
All of these changes seem doable on their own, but for most people they are different from the habits and routines they currently have. These things represent a shift in behavior, a different approach to everyday life.
The point is, getting them to work requires a constant shift towards this behavior. This is not what you are trying on when you think of them. It should become statements describing a normal life for you to do otherwise than is necessary to become a “strange” or unusual pattern.
Without this change in your perception of normal behavior, these changes will not last. They will not become permanent changes in your behavior and without these permanent changes will not bring the desired financial results.
This is similar to the old adage: insanity is defined as continuing to do the same thing and expecting different results. If you don’t change something – and change, I mean change it constantly and set it as a new norm in your life, then you will continue to get the same results in life. There is no way around this.
For some people, the best approach is to make a lot of changes at the same time. For these people, making all these changes in one fell swoop is what they need to do. For others, gradual change works best and should focus on accepting new changes one at a time and allowing them to take hold.
Remember, the main thing is to be on the lookout for these life changes until they really get normal and the old way of life gets weird. It’s only when you wake up one morning and realize that your sense of normalcy now includes that financial success will really start pouring into your life with little visible effort.
Final thoughts
The takeaway from this article: The key changes one needs to make from a “typical American” lifestyle to a lifestyle that is conducive to wealth accumulation are not really radical changes. Most of all, they require introspection. They require thinking about the choices we make and asking ourselves if there is a better way to do things when making decisions big and small.
The road to financial success doesn’t start with adversity. It starts by asking why you are spending every dollar you spend. It starts by figuring out which things are really important to you and which ones don’t really matter. It all starts with testing and discovering new things. It starts by developing a few new skills that will make you more comfortable doing common things like cooking.
Over time, these things come together to lift you from paycheck to paycheck. They lift you up so you can pay off your debts surprisingly quickly without giving up on things you really enjoy (and believe it or not, often finding more space to do things that you enjoy).
This is a path that begins not with radical changes, but with many questions.
You are ready? Let’s go to.
Achieving Financial Success Without Excessive Thrift and Huge Income | Simple dollar