I hate feeling obligated. I don’t like to commit to doing things in the future. I don’t want to have to do anything. I want to keep myself open to doing the things I WANT to do. It’s all about options and choice for me. It’s all about opportunity costs. If I commit to doing something I am just ho-hum about, that means I don’t have the opportunity to do something I might REALLY want to do if it comes up. And since I stick to my commitments, I can’t pivot.
That pretty much defines my financial philosophy as well, and I am just seeing the parallels. For example, my goal is to live in the smallest house (cheapest) in the nicest area I can be in. I know I can afford more, I just don’t want to. What drives that for me is that the less I pay for a mortgage, the more discretionary spending I have to save. If I save it instead of spending it, when an exiting opportunity comes up like a last minute trip to Oktoberfest in Germany or a spur of the moment invite to go to Italy for a week – I can jump on it! Plus, if I need to move quick, I know I can sell my house more quickly and have a more liquid asset.
If you don’t feel like you have enough money in your budget to take advantage of great opportunities, take a look at the following:
- Housing – are you paying more than 31% of your gross income in housing? If so, that is deemed unaffordable. I would argue that you should spend the smallest % of income you can while living somewhere safe, clean, and comfortable. Once you get some cushion and are well established, you can start to push that percentage towards 31%
- Car – Realistically, what do you NEED out of a car? I need safety, affordability, and low total cost of ownership. Anything past that is now in the WANT category. It’s also a depreciating asset which means every day you have it is worth less than it was the day before. Spend as little as you can on this type of asset.
- Your Upkeep – I think I am mostly talking to the ladies here, but fellas are getting more into the whole grooming thing. Anything having to do with health is great – please, go to the gym! However, what are things like regular nail appointments, eyebrows, tans, lashes and Botox for 20-somethings (you don’t need it) really getting you? I guess a better question is what is it costing you. (the answer is maybe A LOT) I never lost out on a date, and job or a business deal because of the status of my eyebrows. If you are looking for some extra dollars look here!
Everybody’s values around money are different. We all have our stuff that when we spend money on it we don’t regret it and we feel like, “yes, this is why I work”! If you are a car person, that’s ok – its just not me. Same with upkeep – not really a fan, lol!
Whatever your “thing” is, prioritize spending on that but work to keep the money you HAVE to spend every month as low as possible so you have more to do with what you wish!
Curious about your money values? Take this short quiz: https://abacuswealth.com/quiz/
If you want help figuring out how to get your overhead low and plan for the things you really want, contact me!