When it comes to personal finance, there’s a constant ‘battle’ for most adults to resist the temptation to spend money. A lot of advertising, many stores, credit cards, good prices, new trends … all of these make parting with our money an ‘easier’ experience than ever. Resisting the urge is not easy for most of us, so responsible spending takes a lot of will and strength.
For many adults, getting to earn a good wage means they feel more ‘entitled’ to live ‘better’ and lifestyle inflation is not just a combination of words. I don’t think there are too many of us who haven’t noticed we started ‘needing’ more stuff, as our income went up.
Years ago, when I met my husband, he gave me a digital camera. It was one of these ‘point shooters’, a very cheap one, even if for me it was something really huge. I had a small wage (almost as much as the camera cost) and couldn’t believe that I get to own such an amazing ‘toy’. As time went by and my salary increased, I found out that I needed a better computer and then a car. The monthly payments were pretty big and my costs skyrocketed.
In 2011, as we were in the US and I got myself a very good web design contract, my earnings increased again. Immediately the regular point and shoot cameras (had another one purchased few months before leaving the country) weren’t good for me anymore, so I was craving for a DSLR. Got myself a brand new Nikon 5100, two weeks after it was officially released. Together with a zoom lens, it cost me $1400, which is very much, compared to the hundred bucks my point and shoot cost.
At the end of last year it became clear to me that, while we’re not in debt and the earnings are OK, we’re both living beyond our means (or at least we spend money more than it would be healthy to do). The only good thing about us both is that we don’t change our gadgets every year, so, once we secured the ‘junk’ we needed (new laptops, DSLR cameras, a camcorder, tablet, some nice clothing etc.) we stopped buying more stuff or replacing the things that were still working properly.
When 2013 started, I gave myself the task for keeping track of our spending to understand our finances better. It wasn’t difficult for us to see where our money is going and being more responsible. It’s been a pretty hectic year, with a lot of exciting things happening to us (getting married, getting pregnant, having my husband start his own business, traveling etc.) and we were able to keep our head above the water, not spending too much, just enough to make it all work and still be able to save a little.
Now we’re living below our means, at least this is what I can infer from what others are saying. We have relatives or friends who are a bit amazed that we don’t eat out as much as we could, that we don’t buy new clothes at least 3 times a month, that we don’t have smartphones with expensive monthly plans. Being a web designer and blogger, many of my friends in the ‘industry’ expect me to be crazy about such devices and, when I show them my 5 year phone with no data plan the reply I usually get is “how come you don’t have a smartphone when you’re earning this much?”
Earning a decent income every month and splurging on stuff you don’t really need are two different things in my opinion. The fact my income is not that bad for the wages we have in my country doesn’t mean I’ll squander my hard earned money on useless junk. Sure, when it came to getting a new laptop (after my old one died on me), I immediately entered the store and got myself one of the best laptops I could find. This is my ‘bread-earner’. My phone is just to call/be called, so, as long as it still works, it will be used. When it comes to traveling, while we do make sure we don’t squander money, we still have a budget set each year.
We live below our means in certain aspects and still ‘invest’ money for the things that matter to us: health, travel, good healthy food, business etc. It allows us to save money, meet all our real needs and still enjoy life. While lifestyle inflation clearly hit us too, we try to minimize its bad influence and be more responsible with our money each month.
How about you? Are you living below your means? Where do you splurge? Where do you apply frugal strategies?