Learn to Live Well Below Your Means
Yes darling, I said well below your means. It’s surprising how little we can live on if we have to. I realize a lot of young people are broke and really struggling right now with student debt and skyrocketing housing, but if you are lucky enough to have a weekly paycheck, or at least couple thousand dollars coming in every month, you can figure out how to live below your means.
There are so many things people spend money on that we can actually live without, like cable TV. There are also cheaper ways to have some of the things that are “must haves” like cell phones. If you live in a town with decent public transportation, you may not even need a car. Furthermore, you should never pay retail for anything! If you do, you are being ripped-off, taken advantage of, and making the “one percent” even richer. Learn to buy things at a discount, second-hand, at the dollar store, on Craigslist, at thrift stores, pawn shops, flea markets and used on Amazon — anywhere that you don’t have to pay insane retail prices. Get books and movies from the library, have clothing swaps with your friends. Be smart about these things dear, because unless you’re a trust fund kid, you will wake up one day and wish you had saved more money.
Seriously honey, if you’re not making much money, then you shouldn’t be paying full price for a cell phone, internet, cable TV, name brand clothes and new furniture. You don’t need a brand new car or brand new bike. You don’t need a two-bedroom apartment if it’s just you. You don’t even need a one-bedroom apartment — rent a studio! If it means you can save an extra $300 a month, rent the studio! Or get a roommate. You don’t need to put on a show for people, you need to put money in the bank! Start saving for something more important, more meaningful, or at least more fun, such as a house, a horse, a side business, a trip to Europe, investments, a nest egg, a masters degree, or your retirement. It’s amazing how much money you can save when you stop frittering it all away on frivolous things you don’t really need.
Next to making money, managing money is an extremely valuable skill. Many people in this world who don’t make much money still have great lives because they are good at managing their money. They own homes, they travel, the have expensive hobbies, not because they’re rich, but because they don’t blow their money on meaningless and frivolous stuff. They don’t eat out every night. They buy things second-hand, and save their money for the things that really matter to them.
Get out your calculator and start adding up what you spend over the course of a year on your cell phone, on internet, on eating out, Starbucks coffee, on clothes and make-up, on cable TV, on your hair, on things like pedicures, shopping at Whole Foods or other over-priced stores. Now, think about what you can live without for a year. Just one year! You can do it! Believe me, people making making minimum wage do not shop at Whole Foods, pay for HBO, spend $150 on hair appointments, get pedicures, or drink a Starbucks coffee everyday — and neither should you.
A lot of women highly over-pay for clothes, shoes, cosmetics, haircuts, purses, you name it! A man isn’t going to care whether you paid $200 or $20 for your purse — he isn’t "checking out" your purse, honey! Any man who cares about your purse is probably gay. Like I've said, most men also don’t care about manicures and pedicures. You can paint your own toenails and frankly, if he’s straight, he won’t know the difference. You can even leave your nails bare and as long as they aren’t dirty, he won’t care. Let’s be honest honey, women don’t do this stuff for men, they do it for other women. Stop throwing away money for the sake of trying to impress your girlfriends!
Even if you’re currently making a six-figure salary, you should be living below your means and putting a lot of that money in the bank or investing it. The problem with people who make good money is the more that they make, the more that they spend! They just spend more on their housing, more on food, more on their cars, more on their clothes, etc. They often don’t have a nicer life, the just have more expensive crap! What if instead those people lived like they were still making $15 an hour? Think of all the money they would be socking away for savings, investments, buying property, travel and retirement!
I’ll remind you again, darling, those same people you’re trying to impress with all the expensive, fancy doodads won’t lift a finger if you suddenly lose your job and need their help. Don’t worry about what your friends think, worry about your bank account, your investments, your nest egg, and taking care of yourself. Worry about impressing your financial advisor.
There is a great book about living below your means titled The Millionaire Next Door. If you can master living simply (assuming you have a decent income), you will have far less stress over finances and in many ways, a richer life. Another popular book about personal finance is Your Money or Your Life by Vickie Robin and Joe Dominguez. Suze Orman has also written a lot of good books about personal finance for average people.
Living paycheck to paycheck is highly stressful, and just not very smart, yet so many people who make a decent wage live this way unnecessarily. They think that their lifestyle should reflect their paycheck. This is completely the wrong way to think. Your lifestyle should reflect your values, not your paycheck, dear.
Rebecca Pavlik is the author of Time to Break Some Rules, Sweetie! a humorous advice book for young women. For more details and to view on Amazon click here.