The American mindset is to work harder and longer to have nicer things. It sounds good in theory, but in actuality, it never pans out this way. The first step to becoming rich is learning to live poor.
By “poor,” I mean to be happy with having less. You’ll be surprised by how much stuff we really need—it’s not much. So, why do we always want more?
Consumerism. We live in a consumerist nation. Everything we encounter is advertising or marketing. The major social media networks are collecting our personal data to upsell us something later.
Happiness isn’t Free
Most people fall into this trap of having bigger and better things (called lifestyle inflation), and they can never recover. They can’t rebound from this lifestyle because there is always something new to purchase.
Emotions get involved. Even worse, they attach their happiness to buying “new” things. Emotions and money don’t mix very well, leading to disaster.
If it is a married couple, they constantly argue over spending and saving. The book “Know Yourself, Know Your Money” goes more into detail about our emotional money mindset.
The critical thing to realize is that you can never have enough things if you become materialistic. Every month, your paycheck brings a new idea of what to buy. It becomes an obsession—one that destroys relationships and mental health.
Even if you try to overcome your spending habits, social media is there to drag you back into the fray. On social media, everyone is healthy and wealthy. Without the right mindset, you can let these images of success bring you down.
It’s okay to be different. However, it’s okay to go your own way. It’s fine not to renovate your home every 7-10 years or buy a new living room set every three years.
I have learned that most people are jealous of people who don’t feed into the spending narrative. In “Losing Friends? You’re Doing Something Right” I wrote that people hate when you don’t acknowledge their purchases.
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If your friend buys a boat and what you to gush over it, they are shocked when you are indifferent. In fact, they think that YOU are jealous of them. But, deep down, they know that you can care less about their boats.
Why can’t they stop spending? So why can’t your friends stop spending? Simple—peer pressure. Raise your hand if you went to high school.
In high school, peer pressure was the overwhelming emotion people felt daily. There was pressure on what to wear, what sports to play, and how to talk. As a 40-year-old, I can tell you that peer pressure is worse now than in high school.
You see, most people aren’t successful in life. They can squeeze by in life, but they aren’t getting ahead in any significant way. My favorite YouTuber calls these people “ham-and-eggers.”
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These ordinary folks have no natural desire to make a ton of money, build a business, or climb the corporate ladder. To be clear, this is about 80% of the population.
Now, reflect on your high school days; how many people are super successful? Only about 10% of males make over $100,000/year at their jobs.
Competition. So the competition starts with these high-earners. They want to ensure EVERYONE knows how much money they make.
When they marry, they want the biggest wedding. Their first home needs to be big enough to impress people on Facebook. Their honeymoon should make their friends jealous.
This lifestyle becomes unsustainable because they base it on buying meaningless stuff. This stuff doesn’t even accumulate—out with the old, in with the new.
So essentially, you are buying new things every month and getting rid of old things. There is no progress. It is a costly hamster wheel.
I bring up accumulation because I am a dividend investing and author. My dividends stocks accumulate to pay me more, as does my selection of books.
Can You Achieve Work-Life Balance 2
Once you see your assets accumulating, you’ll understand my thoughts on buying new cars and boats. Those things fade into memories, leaving only their debts behind.
Choose a different path. There is another way. You can decide to forgo the temptations of consumerism. You can decide to build, create, and grow—all while valuing relationships.
Yes, you can decide to live below your means. But does that mean you have to live poorly?
Absolutely not? You can have more awesome things than anyone, as long as you can afford them. The problem with most “ham-and-eggers” is that they can’t afford their luxury items.
In “3 Steps to Live Entirely on Passive Income”, I wrote that your investments should pay for your life, not your job. This is the crucial element missing from the standard person. They will go out and buy a boat with income from their job.
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Now, they need to work more hours to pay off the boat. When they finish paying off the boat, they buy another toy or house. Again, they head back to work.
The magic of living below your means is that it opens the door to true wealth. If you make $2,000/mo in rental income, it’s okay to spend $500/mo on a car payment.
Your rental property will pay for your boat. You can reinvest the other income and grow an even more giant nest egg. Living below your means gives you time to accumulate your assets.
Once you have your assets, you return to the world in a much stronger position. My wife and I have been living below our means for the last three years. We have had roommates, rental properties, and a tight personal budget.
Over this time, we built a dividend portfolio of over $215,000, which pays us $750/mo. We have rental properties, and my book business is growing.
If we wanted to go back to living normally, we could have new cars, furniture, etc. But now is not the time. I am 40-years-old, and now is the time to build our wealth. Maybe in our 50s, we can splurge more often.
Become CEO of Your Life
You’ll find that living below your means becomes a part of your personality. You can read about it in Dave Ramsey’s “Baby Step Millionaires.” Ordinary people become millionaires but have no desire to blow their money later.
Bringing you closer. Our relationship is so much stronger on our path to greatness. We have a unified vision, and we are dead set on setting our family free from the rat race.
Living below your means brings you much closer, while spending without a plan can destroy your relationship. Read “Smart Couples Finish Rich” if you want a plan on how to grow together financially.
Living below your means is different than the path others choose. It requires discipline and determination. Once you get over the initial shock, it becomes more manageable. You’ll enjoy saving and investing more than spending frivolously.
Don’t worry; I am not perfect. I still watch video game shows and want to buy every new game that comes out on my Nintendo Switch. However, I breathed and decided to invest my money into the market.
I can buy games with my dividend debit card as required. But, after I breathe, I realize I just don’t have the time to play many games. I use my logic, not my emotions, to overcome my consumerism
It won’t be easy to live below your means at first. They trained us to spend, spend, and spend some more. Your friends will laugh at your car and the fact that you have roommates.
However, they won’t laugh when you have a million dollars in the bank.
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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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