Living beneath your means in a world that would rather you bankrupt yourself to keep up with the Joneses can be difficult at best.
And it might be strange to think that I’m about to write a post of financial advice when my rent is eight days late and likely won’t be paid until Friday — but rest assured everything I say is very much directed right back at me and my own family. I’m going to do my best starting now to follow it.
I’ve heard the advice before: live beneath your means.
It seems like a nebulous sort of bit of advice. What does that really mean, anyway? I’ve spent a while trying to come up with something to describe it, and this is what resulted: spend your money so that there’s something left at the end of each month.
This is where it gets tricky. And it’s where people get somewhat prickly. Because we want nice things. We want a nice home and a nice, reliable car. We want a flatscreen and an Xbox and to Buy Things. We want to eat out and go to movies and buy our spouses and children presents Just Because.
We feel we deserve it. I feel I deserve it, and you probably do too.
The problem is, we often Can’t Afford It.
Those three little words are almost dirty ones. You know what I mean — saying them makes a bitter taste in your mouth sometimes.
I grew up very, very poor. I grew up with those words as a constant litany. And yet in spite of that, we always stretched beyond our means. It’s a rather harsh truth, but I never learned how to save. The only lesson I’ve ingrained into my being about saving is that when you save money for something, catastrophe strikes and then it’s gone. So why bother?
I didn’t realize how poor we were until I went to college. I bought my own car with my meager college savings and the promised graduation check from my grandma that I had planned to use to buy a computer. Most of my classmates at my private university had parents who paid for their cars, their tuition, and their spending money. That’s when I first felt the bitterness of having to tell my peers I couldn’t afford things.
When they asked me to join them for dinner. For skiing and snowboarding. For camping. For Spring Break trips. For movies. I had to work my way through college, and even with all the grants and loans and scholarships, I found myself broke sophomore year with expulsion looming due to my finances. If it weren’t for the extreme generosity of two of my friends and the fact that I crocheted my fingers off all autumn selling beanies and scarves, I wouldn’t be sitting here right now typing this. I don’t know what I’d be doing, or where I’d be doing it.
I’ve never learned to live within my means, let alone beneath it.
I thought I was getting back on my feet this year. Yet here I sit, twenty-seven years old, with a balance of a couple thousand dollars hanging over my head for this month. Including $1100 we owe the IRS. It’s humbling. And terrifying. It’s somewhere I never wanted to be again.
So I know that there’s something I have to do differently if I want my children to have a different childhood than I did. If I want my family to succeed and not be torn apart by the crushing weights of poverty and debt.
Oh, I’ve budgeted before — sort of. I’ll get as far as lining out my finances for the month, what bills are due and when, and then that’s it. It disappears into the depths of its spiral bound notebook (of which I have several), and if you were to page through my notebooks, you’d find probably a page or two in each written in panic as I crunch numbers.
A budget is more than knowing when your bills are due and how much they’re for. A budget is a plan for paying them on time. A budget is how you know how much money you have, how much you need, and where it’s going.
Right now, according to our calculations, my husband and I make about $4000 a month. Our bills total about $3400. So where does the rest go? If I have no idea, you probably don’t know either. Either we’re not making what we think we are, or we are spending very poorly. It’s probably both.
My income fluctuates. I once made $1100 in a week. This week so far I’ve made $200 with one shift to go. That’s part of the reason we are le screwed — we haven’t learned that we never have “extra.” We have great weeks and crappy weeks, and we’ve not yet learned to balance them out with good planning. Even with steady income, this can happen due to unexpected expenses and purchases.
I messed this up too. Some of it was due to necessity, of a surety. Some of it…not so much. The result is that I have a net worth hovering around -$70,000 between my school loans, my car loan, and my credit card debt. Somewhere along the line, many of us have been tricked into assuming that buying things on credit should be the norm.
You need credit to buy big things, like cars and houses and yachts and mail-order brides. But for most things? Pay cash.
“But I don’t have the cash,” you say.
You don’t have the cash because you spent it all. Granted, sometimes it’s spent on such trivial frivolous things as food and rent, but sometimes it’s because going out to eat three times last week sounded more amusing than beating up potatoes with a masher at home.
“But I want it!”
Oh, me too. I know. I get it. But if you want it, you should pay cash for it.
There is a way to pay cash for things. There is.
How do you save if you’re broke? How do you…*swallows bile*…wait for ten months or more to get that house or laptop or new flatscreen or minibreak to New York City to see Alan Rickman on Broadway? ALAN RICKMAN WILL LEAVE BROADWAY BY THEN!
First of all, if you are broke to the point of having no money left over after necessities are paid, you probably need a lifestyle downgrade. If your rent is too high, you might need to suck it up and move somewhere you can better afford. This goes for the people who bought McMansions and Lexuses they couldn’t afford as well as those of us at the shallow end of the income pool.
Somehow, we Americans (and increasingly, Europeans and Australians…aw, hell. Everybody.) got it into our heads that we need to always have more. That we need to upgrade our living situation, our functional vehicles, our wardrobes. So we push at the bounds of our income, hoping that we’ll “get by.”
I’m not getting by. Are you getting by?
If there’s anything I’ve learned, it’s that savings has a purpose. It might take twice as long to do things this way, but I’m embarking on an experiment. I’m going to start two savings piles.
1. Squirrel Fund: Squirrels stockpile food and necessities to get by in the slim months. That way when the days of plenty run out, they still have some acorns in their hole to get by when they’re feeling hungry. This is the fund for emergencies — that unexpected car repair, that vet bill, that plane ticket to see an ailing relative. This fund does not get touched except in the case of an emergency.
2. The Treasure Chest: This is where you save for the things you want. This is the money that will buy your new flatscreen, your trip to Europe, your cruise, that rare record you want. It’s also insurance — because in the event that an emergency dwarfs even your Squirrel Fund, you’ll have something more put aside.
It doesn’t have to start with a lot, but it does require discipline, self-denial, and delayed gratification — incidentally, the antithesis of modern culture.
I’ll get back to you on whether I have what it takes to get back on my feet.
What tips do you have for living beneath your means? How have you changed your finances to ensure success?
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