Savings Philosophy #3

This is the third article in the Savings Philosophy Series.

Live Beneath Your Means

I am as guilty about this as anybody else. I do not want to live beneath my means. I enjoy living in a nice house. It is fun for me to just sit in somebody else’s new car - I want to have one too. Being able to put out a full table when friends or family visits makes me feel good. Plus, I cannot turn down an invitation to go out to dinner.

To put bluntly, my desires and wants rule my life. Even now, after I have spent time paring down my possessions (a task at which I am not done) I still want things and can rarely resist buying them, even if I can hold off for a few days or weeks from the first inklings of a desire.

It has made it hard. I can admit it. My biggest elephants are gear for the outdoors and travel. If I have time off, I am planning to go somewhere or do something. Usually, it costs me several hundred to a couple of thousand dollars to go. And, it breaks my budget. So, while I mean well, and can easily agree on the truth of the philisophy, this is one I need to work on.

Nonetheless. Living Beneath Your Means is simply a philosophy that states that you need less money to live on than you make. So, if you make $20,000 a year, you live on $19,000 or less. If you make $100,000 you live on less than $99,000. By doing so, you gain two big benefits. First, you do not have to borrow to live your life. Second, the difference between what you make and what you spend is available for saving to meet other goals or if an emergency occurs.

As a practical matter, this is a very challenging goal to live by. There is no help offered. Businesses depend on you consuming. Friends and neighbors show off their latest acquisitions generating the desire to get the same. Even passively, I find myself visualizing how I would be living if I just had x, y or z.

Those times that I am successful at resisting the siren’s call, it is only because I ask myself if the purchase helps me with what is most important to me. Does the purchase help me with my top priorities? If it does not, I bypass the purchase. Most of the time, I do not need the item and this questions helps me.

If the purchase would help me, the next question is if I need it now or if I can successfully hold off on the purchase. This eliminates most of the other purchases, since there is seldom a deadline to get something useful. In some cases, like an upcoming event or trip, I may still be willing to make the purchase.

That brings me to the final question, and one I need to ask myself more often. Can I truly afford this right now? If I can get to where I ask this one more often, then I should be able to reach my goal of living beneath my means more easily.