In my opinion, there’s a lot to be said for living a simple life. I see a lot of value in a life where you don’t feel the need to get caught up in all of the latest trends, to compare yourself to others, or to spend money to impress others.
Last week, I wrote about all of the backlash that MarketWatch received from its Tweet stating, “By 35, you should have twice your salary saved, according to retirement experts”. That same day, I met with a 35-year-old who has saved 2.7 times his salary – compare that to Fidelity’s suggestion of saving twice your salary by age 35. I had no idea this was going to be the case, but I thought it was an awesome coincidence.
How is this possible?
He does have some things going in his favor including that he doesn’t have a significant other or kids. Regardless, I don’t think that should take away from what he’s been able to accomplish. He doesn’t have a large income, but he intentionally keeps his living expenses low which allows him to live simply and save 60% of his income per month. 60%. That’s awesome. He doesn’t mind living on that amount of money because he would rather have a job that he enjoys, that’s flexible to his needs, and that doesn’t cause him too much stress. He values experiences over “stuff”.
On top of that, he told me that he travels to Europe 3 times per year. But, as you could imagine coming from someone who is able to save so much, he doesn’t spend money on lavish trips. Instead, he spends money on experiencing new cultures and focuses on meeting new people. He told me that he’s going to travel to Portugal this year for $231 (that includes his airfare and stay in a hostel) and that he’ll probably travel to Australia and stay with someone who he met while staying in a hostel on a previous trip.
It pays to be resourceful.
I was inspired. If this doesn’t make you think that you can use your resources (money) more wisely, then I don’t know what will.
There are plenty of legitimate reasons why someone couldn’t save twice their salary by age 35, but I’d argue that there probably are also plenty of areas in which you aren’t willing to cut your spending (or increase your income) to do so.
After speaking with him, I started thinking about ways that I could decrease my spending. Not all of them are exactly realistic at this time, but I was thinking about what would hypothetically be possible for me to do which would allow me to increase my savings to 60% of my income.
The first place for me to look is housing since it is my biggest expense, as it is for most Americans. If I had more roommates, then I could not only decrease my rent, but I could also decrease all other utility bills since they would be split more ways. Secondly, I could decrease my grocery bill as I tend to spend quite a bit at the grocery store. I try to eat a relatively nutritious diet which includes fresh fruits and vegetables as well as a lot of protein to support my efforts in the gym. Nutritious food and protein aren’t cheap. I know I could spend a fraction of my current grocery bill if I didn’t care about my diet and bought the cheapest things possible.
I don’t have a vehicle payment, but if I did this would be the next logical step in the progression. Owning a very expensive vehicle doesn’t really do you any favors when trying to cut your expenses and increase your savings rate. A cheaper, but still reliable, vehicle does the same thing as an expensive one.
A lot of money can be saved by spending less on nondiscretionary expenses as well. These are expenses that aren’t necessary, but that you like to spend on and perhaps make your life a little bit easier. Most of us could save money by cutting back on things like eating out, getting a beer with friends at a local brewery, going out to the bars during the weekend, new clothes, buying things on Amazon (that’s a black hole), subscriptions services, etc. I bet you’d be surprised if you wrote all these things down and added up what you spend on these categories in a month.
I was inspired to take a fresh look at my spending habits after speaking with this person and I hope that you are too. Without even going into a deep analysis I know that thee are many areas where I could cut my spending, and maintain the quality of life that I desire, to help me reach my savings goals and reach financial freedom at an earlier age.
