Let’s talk about money. Someone will probably call me insensitive or naive for posting this, but I don’t care. It’s important. Please keep in mind, I’m talking about people with normal to above average incomes, not senior citizens on SSI or single moms on state assistance. I understand there are hard cases.
I heard a 60+ year old man say this today…
When I was 18 I made a decision. I decided I never wanted to be under financial stress. I have lived that decision my entire adult life and have never experienced financial stress. How did I do it? I saved 50% of my take home income without exception. I’ve had months I’ve made $100, and other months I’ve made $100,000. But regardless, I still saved 50% of my income. My income has fluctuated but my saving percentage hasn’t. This has enabled me to purchase several business and a large ranch without incurring debt. I hear people say ‘I couldn’t possibly live on 50% of my income.’ Oh! baloney, you choose not to. Sure it’s harder once you have a 400K mortgage and kids in private colleges, but you decided to live that way. You don’t need to live that way. And if you had decided when you were younger to live differently, you could have your 400K home and private college today without a dollar of debt.
I’m not trying to preach. I don’t save 50%. But I know everything this man said is true. I could have saved more, and if I had, I’d be much better off today.
I’m aiming the following list at the 18-25 audience. Why? Most older people are already working like slaves to pay off debt and can’t imagine living on 50% of take home. A huge percentage of people are living paycheck to paycheck by 30 with college loans, cars, credit cards, and mortgages. Once you’ve accumulated your debt, living on 50% will become impossible due to the choices you made earlier and your financial stress may never subside. Creating financial freedom starts young, requires disciple, and must become a habit.
Here are some ideas you could use to help you save 50% when you are just starting out in life:
(Keep in mind that these lifestyle sacrifices would be temporary – delayed gratification)
- Live in a small apartment with roommates
- Avoid buying a car. Cars are money pits. If you must purchase one, buy a cheap used car with cash. Never buy a car on credit
- Don’t indulge fashion trends. Instead wear practical durable inexpensive clothing. If your friends say you look like a dork, find new friends
- Avoid high-maintenance boyfriends/girlfriends
- Avoid expensive vacations. Instead make them local and cheap. Maybe go camping or biking.
- Don’t eat out
- Warning – this one is blasphemy – Avoid student loans. Pay cash (Community College) or learn free on the internet
- Don’t upgrade your home, your car, your education, or your clothes until you can pay cash
You may not want to live this way, but you certainly could live this way, if you chose to.
Most people say they can’t live on 50% of their take home. When in reality, they mean they won’t live on 50% of their income because they aren’t willing to make the trade offs. Or maybe they don’t think the trade offs are worth it.
I genuinely want to discuss this with you. Is saving 50% reasonable? I don’t know if it is. That depends on who you are, right? But for many people it is possible. What would happen if your income was cut 50% right now? Would you go bankrupt? Would you die? Would it destroy your marriage? Or could you survive for years?
Today’s post was inspired by Episode 63 of The Focus Society of Overachievers podcast.
