On social media these days, there seems to be endless numbers of people who are striving for “The Lifestyle”- retire really early from the J-O-B, travel the world and have tonnes of cash to buy whatever you want (like a car, a rolex and a huge mansion).
I blame celebrities like Kim Kardashian for this.
Be careful with ambition
Don’t get me wrong, being ambitious is great (I wouldn’t have become a doctor without it), but there is a point where ambition becomes a problem for our mental health. When we compare ourselves and see what we don’t have, we’re setting ourselves up for a life of misery and disappointment when we constantly strive to have what we don’t.
I also read a thoughtful blog along the same lines: “High Income Earners Are Ruining Personal Finance”. The author states a good case that those people who are constantly striving for extreme early retirement have the means to be able to live frugally out of choice (not out of necessity like most people), then after a few years of doing this, they can stop and ride off into the sunset. This potentially sets readers up for unrealistic expectations.
But what if your goal is not to be like this? What if your goal is to retire at the “traditional time”, make sure your mortgage is paid off, and have a few nice holidays every year. Does this make you a boring person?
Of course not!
In fact, I see this as a very good sign that you’re going to be just fine, and here’s why.
Living Within Your Means
I used to really hate this phrase because to me, it was about penny-pinching and not being able to do anything in life. I definitely rebelled against this.
The stupid thing is, I learnt later that this really isn’t true.
All “living within your means” is saying is don’t stretch yourself financially. This includes not buying yet another huge house and add to the mortgage you’re trying to pay off, not buying yet another car on finance that you never pay off, not leaving debt on credit cards so you have to continue to be a slave to the bank you got it from.
This is what living within your means truly stands for.
You can still have an amazing life, but only if you accept that you can’t do everything all at once. There has to be a few fundamentals in place, like having an emergency fund and only spending x-amount of your income on a house or a car.
Dave Ramsey – a finance guru in America if you don’t know, says we should aim for mortgage repayments that are no more than 25% of our income.
He also says that no more than 50% of our annual incomes should go into buying a car, because they go down in value.
And as he says:
“rich people don’t put a large percentage of their lives in things that are going down in value. That’s how they became rich.”
You may not agree with his figures, and if you live in an expensive area, you definitely won’t agree, but think about it this way. The cheaper you can make things like home and car repayments, the more disposable income you will have to put into savings and to start investing. I’d much rather have money to go on holiday, than to be stuck at home because I have to pay off a mortgage.
If this means moving to a cheaper area in a smaller house, then so be it.
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Simpler Life, Less To Save For
If you have no interest in “being a millionaire” and have no desire to own a yacht to sail around the Bahamas, then you have less to save up for!
If however, you want to pay off your mortgage, and then have enough to take a series of “mini” retirements (a month in Australia in a camper van anyone?), or literally up sticks and move to somewhere like Bali (where cost of living is significantly cheaper), then guess what? You won’t have to aim so high. You don’t NEED to be a millionaire to do these things. Nor do you need to wait until you reach official “retirement age”.
There are ways to go about achieving these things WITHOUT having to wait for years to become a millionaire (and save yourself a HUGE headache in the process!). If you have a well-rounded budget, you could start up a holiday fund that you continuously keep topped up so you can have lots of mini-adventures. Paula Pant, another finance guru from America, saved up enough money (because she lived within her means in a rubbish apartment and didn’t have a car) and took a series of “mini retirements” – whole years off work to go and travel and explore. She doesn’t see retirement as an either/or process.
But It Won’t Work For Me Because….
Now, I can hear what you’re thinking. It’s ok for her because she doesn’t have kids and therefore doesn’t need to stay in one area to enroll them in school, and yes, I agree with you on this. There are stories of people taking their children away on long adventures, and my hat goes off to them. I’m not sure that lifestyle would be for me (although I would never say never!).
But what’s your excuse if you don’t have kids?
If you’re wishing you could take a year out but keep saying “yeah but”, then you are using excuses and getting in your own way. If you have a scratch that needs to be itched, then do something about it! You might find that your employer will grant you a year off if you ask, and if they don’t, well then you’ll find another job.
And if you think you’re tied down because of a mortgage? Well guess what, you can rent your house out and leave it to be managed for you. There is no shortage of wifi abroad, so you can still keep in touch!
It’s worth thinking about – where there’s a will there’s a way.
Bottom line: You don’t need to be earning loads to do well financially
If you’re thinking that in order to be able to save, invest and generally have financial success in life, you need to be a high-flying executive or professional, then you’d be wrong.
Often it’s the unassuming types who become rich. This is because they are living within their means, saving and investing their money instead of buying “stuff”, and do this consistently over a number of years while still living their life. If they get a pay rise, their cost of living doesn’t rise with it.
The millionaire next door provides plenty of stories of people who have become wealthy, not through working in a 6-figure salary job, but by doing little things well, and consistently, like saving and investing.
An article in the daily worth gives examples of extremely wealthy older women – so called “secret millionaires”. Yes they’re all American, but honestly, there is no reason why this wouldn’t happen in the UK too.
Take the pressure off
So let’s take the pressure off of ourselves, show gratitude for what we do have, and enjoy the little things in life – like a glass of wine in the sun with your family, or a fun game of “hide and seek” with your kids around the house on an unexpected snow day.
Life is not meant to be a series of disappointments for not having what “we think we should” according to society. Life is meant to be lived and enjoyed (while stashing away savings and investing for the future). You’ll be much better off for it I promise!
So on that note, have a fabulous week and enjoy the little things!
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