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Eggstack is an independent financial technology company located in Jacksonville, Florida. Our mission is to help you overcome uncertainty about retirement planning and inspire confidence in your financial future.
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Do you dream of a bigger house, a luxury car, and a lifestyle that screams success? There is nothing wrong with wanting nice things, but chasing the appearance of wealth keeps you from achieving true wealth. If your personal finances are not where you want them to be, a shift in mindset might be what you need.
A recent LendingClub survey found that 57% of U.S. adults live paycheck to paycheck. Even among those earning over $100,000 a year, 40% still struggle with this. Meanwhile, automobile loan defaults are surging: 1.7 million vehicles were repossessed last year, the most since the Great Recession. This year we're on track to double it.
A major reason is easy access to credit. Banks and lenders will gladly saddle you with more debt than you can possibly afford. If you are relying on them to keep you out of trouble, you are sadly mistaken.
Modest living simply means living below your means. It’s financial humility—choosing stability over flashy displays of gluttony. Instead of stretching your credit to look successful, accept the fact that foolish overspending will never allow you to achieve true wealth.
Can you guess the most commonly-driven vehicle brand among millionaires? Is it Bentley? Lamborghini? No, it’s Toyota. Wealthy people don't become wealthy by maxing out their credit. Instead, they grow wealth by saving and investing.
Would you like to stop worrying about money and sleep better? What about retirement? Would you like to retire while you're still young enough to enjoy it? Modest living is key to achieving those goals.
How do you live below your means? Stop spending money that you don’t have to impress people you don’t know. You need to shift your priorities—from buying expensive things to growing wealth. Let go of the need to impress others and secure your future instead. The shift will dramatically change your life.
As an added bonus, modest living decreases the chance you will fall victim to crime. Who’s more likely to attract a thief—a person in designer clothes driving a BMW, or someone in a T-shirt driving an old Toyota?
Changing your mindset from constant consumption to living right doesn’t happen overnight. But it starts with awareness. Here are some practical steps to help you:
Take an honest look at your life. You likely have more than you realize. In order to be content with what you have, you need to practice gratitude on a daily basis.
For perspective, consider Dhaka, Bangladesh—a city of over 18 million people. It’s one of the most overcrowded and polluted places on earth. The average monthly income is just $275. When viewed from a global perspective, most of us already live with abundance.
Ask yourself this: When’s the last time you went to bed hungry? Did you know 25% of the world skips meals due to poverty? It’s called food insecurity. Such a fancy name for people literally starving because they can’t afford food.
Track your spending and create a budget. Some expenses—like your mortgage and car payment—are obvious. Others, like groceries, utilities, and household supplies, require a bit of research. Use a spreadsheet or budgeting app to list everything on a monthly basis. Add it all up—this is your spending plan.
We recently updated our budget as part of ongoing retirement planning. We were surprised to see how much we spend on groceries and household items.
This is a crucial step. Compare your total spending to your net income. If you're spending more than you make, you are sinking further and further into debt each month. Set a goal to spend less than you earn and make it happen.
If you’re under 30, financing a home or car is understandable. But by age 50, you should be paying cash for automobiles and making serious progress on paying off your mortgage. By retirement, you should be debt-free.
The most dangerous kind of debt is consumer debt: credit cards charged to the hilt with clothes, vacations, gadgets, and entertainment. Getting into debt is easy. Getting out requires two things:
If your life revolves around chasing the next dopamine hit, this will be tough. No one said being financially responsible is easy. Admit you're a shopaholic and change your ways.
Finally, modest living isn’t only about the house you live in or the car you drive. Entertainment can also drain your wallet. Concerts, ballgames, theme parks, and shows can cost hundreds of dollars for a single outing.
Occasional splurges are fine—but they shouldn’t be a way of life. Instead, explore free or low-cost activities such as scenic walks, arts festivals, car shows, tennis, or volunteering. What you do is not as important as who you create memories with.
Wealth isn’t about how much you earn, it’s about how you think, live, and save. Modest living is a virtue. It’s a discipline that leads to self-control. Saying no to unnecessary spending is one of the most powerful tools for building wealth.
In his book The Millionaire Next Door, Thomas Stanley writes “One of the reasons millionaires are economically successful is they think differently."
The peace of mind that comes from modest living lasts longer and feels better than the cheap thrill of buying something new. By choosing to live below your means, you will reduce financial stress, build confidence in your future, and be truly free.
Photo credit: Pixabay Eggstack News will never post an article influenced by an outside company or advertiser. Our mission is to help you overcome uncertainty about retirement planning and inspire confidence in your financial future. This article is for informational purposes only and is not financial advice or any other type of advice. Eggstack makes no representation to the validity, accuracy, completeness, or suitability of purpose of any information presented in this article.
