Bills. Expenses. Stagnant income. The rising costs on just about everything. Our retirement portfolios see-sawing up and down. Being “financially strapped” is becoming more than a problem; it’s an epidemic.
But as I read through a few popular articles and posts, I wonder if we really have the right artillery to fight this battle and defend ourselves. For example: Here are just a few money-saving strategies that people are resorting to:
• Skimping back on regular household products. No more dish soap, paper towel, fabric softener??
• Making your own clothes.
• No more hot showers.
• No more eating out.
• Canceling the TV.
• Living on less than $12,000 per year.
• Ditching the car altogether.
• Moving back in with the parents (and not in your 20’s).
Some of these might be silly, but this is what we offer up in retaliation. This is what our society is resorting to as a way of combating these economic pressures.
More and more, there seems to be a rising trend of people who are deciding to live WELL below their means on or at near-poverty level income. And their proud of it! It’s their way of being frugal. But to me, it’s just plain ridiculous.
Don’t Get Me Wrong:
…“Anyone who lives within their means suffers from a lack of imagination.” – Oscar Wild, …
Now before you start filling the comments with hate stories about how the rest of the world lives in poverty and therefore why should we spend like there’s no tomorrow; that’s not what this is about.
I’m not an advocate for consumerism or materialism. I am certainly way off from living like a Kardashian.
What I’m getting at is overcoming the guilt of not being able to spend your money the way you want to. Isn’t this the reason we go to work? To be able to afford the lifestyle and things we want?
What Inspired This Rant:
All personal finance comes down to two parts:
• Money In
• Money Out
For over a decade now, I’ve really been trying to ramp up my knowledge on the first one. I’ve been engaging and learning about investing, stocks, saving, and passive income have been some of the major areas of focus. I want to increase the number of things that make me more money besides just my job.
But as I look to learn more, I keep getting clogged with advice that focuses solely on the “Money Out” part. And to some extent, there seems to be a trend to become righteous about the extent to which someone practices this method.
David Bach, the author of “The Automatic Millionaire”, became famous after suggesting his simple savings strategies such as hording away the $5 per day that they’d usually spend on a latte. At a 6% interest rate, you’d save $24,055 in 10 years (assuming you buy that coffee every single day).
That’s a lot of money. So gee, what else could I stop doing to make a few grand? What if I:
• Wore the same clothes for the next 10 years?
• Stopped driving my car?
• Stopped taking showers?
…. Okay, let’s not get carried away. Or are we? This is my point. The media has a bad habit of taking a good metaphor, scrambling the message, and then turning it into something that may not be good for you.
I’m not making fun of Mr. Bach. His book and the notion of the “Latte Factor” have helped many people. But remember that this is just a metaphor. The Latte Factor was asking us to look at our priorities and cut back on the things that might not be helping us reach our goals.
It’s perfectly reasonable to ask ourselves this question and make cuts to things we really don’t need. But I don’t think the intention was to cut down to the bone and not enjoy your life.
If You Do Your Chores, You Get An Allowance:
This might be one of the first personal finance blogs you ever read that actually tells you that its okay to buy something that you want.
But like when you were a kid, you only got your allowance when you did your chores. So here are your chores:
• Put some effort into the “Making Money” side of personal finance. Read about 401k’s, stocks, real estate, whatever. Find a way to make money “literally” while you sleep.
• Get your budget in order. Remember that setting up one is simple as long as you follow one principle: Money In > Money Out. Otherwise, try again until you get it right.
• Work into that budget an allowance. Say $50 to $100 every month. And you go spend that money on whatever your heart wants. No guilt. No strings attached!
If you’re responsible, you go to work everyday, and you’ve got your goals in order, then I see nothing wrong with enjoying the fruits of your labor every once in a while.
So go ahead. Have that coffee. I’ll be there too.
Readers: Are you tired of being frugal all the time? Do you feel like some of the strategies and suggestions out there for making money through cutting back are starting to miss the point? What ridiculous things have you heard people try to save a buck? Is this really how we want to “get rich”?
* This post was originally published October 12, 2011.
Photo Credit: Microsoft Clip Art