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You proved my point . As you just said —-Living below your means means what you want it to mean .
That is absurd—- to throw out a mantra that has no exact meaning means little ,especially when it contains nothing you can specifically act on..
There are formulas for living below your means so to speak and they are actionable with actual guidelines and actual ratios of discretionary vs non discretionary income that is totally actionable and meaningful .
Whether you agree with some of the formulas is a different issue but they are at least standardized and actionable..
You may as well tell someone to lose weight just diet ,without giving them a working actionable plan to meet their specific goals. How many calories need be cut? How much and of what should I eat ?
There is a wealth of info out there on how to invest and grow your money . There is very little that tells you how to structure for spending it
Last edited by mathjak107; 11-13-2018 at 06:14 AM..
As an example ,here is a typical actionable plan . It is not telling someone just live below your means - have a nice life . Rather it is giving you an actionable plan to develop a way of living . It deals with the fact means can vary year to year . Are you going to move yearly ?
It gives guidelines for structuring that diet so to speak if you want to equate it . It is actionable . In this case it is telling you that you can have a ratio of discretionary to non discretionary income of about 30% . That ratio is what allows someone to live below their means since it provides a cushion in very specific terms .
Like I said I can live below our means in manhattan but the ratio of discretionary vs non discretionary income would not be good .
I am not saying this is the right plan for everyone .But I am saying the statement live below your means is meaningless by itself yet it is thrown out there all the time as if it was some plan. It belongs with my other pet peave I’m living on a fixed income
Last edited by mathjak107; 11-13-2018 at 06:15 AM..
To me, the key to all of it, rich or middle class is paying YOURSELF first. So save first and then whatever is less you can spend. And put your savings on autopilot. Take advantage of any forced savings so you don't even have access to the $$.
That was my thing too . I can’t say I was ever frugal . I mean I bought things wisely but I always liked my new cars ,my hobbies ,etc . I just wouldn’t t buy the bmw I wanted until way later in life .
I preferred to attack things from the investing side of things making sure I maximized my compounding .
A penny saved may be a penny earned but it will always be a penny unless well compounded on .
So I can’t say I cut spending to only what was necessary or i reused tea bags but I did maximize saving and compounding on the bits I did save and I always made sure I had at least something to save . I had 3 gigs going on in my early years when I fell short on saving
How do you adopt a frugal lifestyle when you're rich? Say like a pro athlete.
You have to go on the assumption that this will be your last season. If you are an entertainer, you have to assume that this will be your last movie, your last record sale, etc. If you are an author, you have to assume that this will be your last book sale.
Rather than envy these people who have acquired incredible wealth in a short period of time, I feel sympathy for them, as I know what their future is likely to be once the money stops coming in. Their high overheads guarantee a grim future.
And then there is the problem that if you have a high enough income, you can hire some quack doctor who will prescribe anything you want, no matter how bad it is for your health. In this respect, the really wealthy have worse healthcare than a middle class person with good health insurance.
Yet another problem is that a really high income allows you to engage in expensive risk-taking hobbies. Of course if your high-risk hobby results in your death, it does solve the problem of running out of money. On the other hand, if your high-risk hobby results in an injury that leaves you incapacitated, then your remaining life is really grim.
Frugality is NOT about being poor... it's about making conscious choices of HOW to spend.
It seems that this distinction needs to be pointed out monthly.
Yup.
Make smart choices and consider the value of what you are purchasing.
Again , just because something is a good value does not mean it is a good idea to buy it unless you have that healthy ratio I spoke of .. so being a value is one thing , just because your budget that month has some extra cash does not make it living below your means.
It amounts to having the healthy cushion of discretionary vs non discretionary income and having a place to cut back when the awe craps of living hit before you buy that thing of great value. Just being under budget is not the same thing as having a healthy ratio for discretionary spending.
I can tell you living in manahattan we would be cutting out a lot of things from our budget because of a poor ratio , even though the monthly total nut would be the same in both places . I certainly could call either location living below my means but there is much more to it then that
Last edited by mathjak107; 11-13-2018 at 08:00 AM..
One of the biggest challenges for people who surround themselves with wealthy people is trying to keep up with Joneses. It seems normal for everyone to have luxury cars, take four vacations a year, wear certain types of clothes, have a certain level of home, send your kids to camp or private school, etc. And you don't need to be a pro athlete for this pressure, this starts very easily once you hit a certain income level. And all of these things can so easily feel like Needs, not Wants
An easy way to keep your money is to live in a more normal atmosphere where you don't feel compelled to do that
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