Today, I want to turn my focus to you. That’s right; you get all of my attention for today’s article. I want to determine why you are not becoming wealthier each day.
Like most people, your spending habits prevent you from building wealth. They trained us from a young age to consume without thinking.
However, if you can suppress these habits, even temporarily, you can amass a great fortune. Once you have your money working for you, you’ll have the option to return to spending.
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Spenders in training. America’s economy needs people who spend and consume. We derive most of our gross domestic product from consumption (roughly 70%).
If the big-wigs need us to spend, then they must train us at a young age. We believe our income will catch up with our spending one day, but that is not the case.
Each era in your life has new ways to spend more money. I covered these ways in my Staying Debt-Free at Any Age series.
- Your 20s: Dating, drinking, hanging out, living in the city.
- Your 30s: Getting married, weddings, houses, kids.
- Your 40s: Kids, private schools, vacations, Joneses.
- Your 50s: RVs, motorcycles, boats, cars.
- Your 60s: Grandkids, fancy homes, lavish vacations.
- Your 70s: Bucket list, last hooray.
Changing the narrative. If you want any chance to survive your spending fate, you will have to change your ways. Trust me; I was once a spender as well.
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When I was in my 20s, video games were my passion. I bought so many video games per month that it became second nature. I didn’t even have time to play them all.
Luckily, I kept all my video games over the years, but I am still “net negative” in the spending category. That means I spent more than they are worth today.
I assume I spent at least $100,000 on video games between 2001 and 2018. In 2019, my wife and I began our journey to financial independence—changing how we view the world.
You will also have to change the narrative of your spending story. It will be tough because EVERYONE wants your money. You cannot leave the house without something screaming at you to purchase it.
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Becoming a Saver. So how do you convert yourself from a spender, who may even have credit card debt, into a saver? The simple answer is slowly.
The first step is envisioning your dream lifestyle and retirement. I know women may dream of indiscriminate shopping, spa days, and massages; men dream of motorcycles, fast cars, and boats.
We can have these things, but only after a season of saving. A season of saving is when you hunker down, reduce spending, pay off debt, and start saving.
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In a nutshell, your season of saving is when you grow up. It sounds horrible, but it is a necessary evolution to achieve the actual fun part of life.
Saving is fun. Once you become a saver, your life will take a turn for the better. I’m not saying you have to save so much that you’re miserable, but you may be uncomfortable initially.
Let’s look at a typical payday for a spender versus a saver. In this example, the spender and saver earn $3,000 per paycheck, with two monthly paychecks.
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The spender pays $2,000 per paycheck in expenses. Within three days, the spender buys $1,000 worth of clothes and waits until the next paycheck—they live paycheck to paycheck.
The saver pays $1,200 per paycheck in expenses because they lowered their costs over time. They save $1,000 per paycheck into different saving vehicles. They have $800 to spend at their leisure, but they usually hang out.
The hidden secret of Savers. Over time, the saver will generate more income because their savings produce revenue.
Once the saver reaches the highest levels of financial education, they will purchase things like CD Ladders, Series “I” Bonds, and 30-Year Bonds.
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Once they complete their emergency fund, they can invest heavily in income-paying securities like 30-Year Bonds. The interest payments from these bonds will give them guilt-free income for the rest of their lives.
So now the saver earns $6,000/month for their job but another $500/month from interest payments. Their purchasing power is much higher than the spenders because they have completed their season of saving.
How saving looks in real life. My wife and I became savers and never looked back. I recently finished the month of October 2022. I gave myself $1,500 for food, gas, snacks, and fun. That’s $50/day in San Diego.
I finished the month with $290 remaining in my budget. I can roll this budget over into the next month or go out and spend it however I like. The $1,500 was already part of my overall Recession Investing Plan.
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The scarier part is that I have $220 on my dividend debit card remaining. My dividends keep coming in as I save under my spending plan.
I have more options to spend money than ever before, but I am no longer a spender. I spend it in rare instances and only for excellent reasons.
You may not return to spending. After your season of saving, you may not return to spending. It’s tough to spend money on things.
It’s far easier to spend on experiences that help build relationships. You’ll learn that during your season of saving.
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However, once you have the basics of saving, building an emergency fund, and creating a nest egg, you can do as you like with your cash flow.
Conclusion. How long will your season of saving take to complete? I think roughly 3-5 years. You can become debt-free rather quickly; however, you want to build a nice income stream during your season.
3-5 years seems like a long time, but it’ll fly by. Time moves fast because you’ll stop stressing over money and enjoy getting your paychecks.
You won’t worry about credit card bills, student loans, and emergency maintenance. You’ll have more solutions than questions, and your life will be much brighter.
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Once you get away from debt, your life becomes an explosion of bright colors. You’ll see life through a different lens. My Debt-Free Society series shows how I see the world through the book covers I created.
When you are in debt (because of spending), your life is black and white. However, when you pay off your debt and build your savings, everything pops into 3D color.
That is the power of having financial options at work, home, and in relationships. You take 100% control of your life as you become a saver—changing your destiny forever. Good Luck!
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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. All Right Reserved Military Family Investing
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