We all know that there are two major determinants of keeping yourself financially afloat, right? You need to keep the income flowing in and you need to keep your expenses below your income. The problem that sometimes arises is this: as we cruise down Success Lane in our chosen careers, this success often comes with greater financial rewards.
Why is that such a problem? Well, in and of itself, making more money is definitely not a problem! At least, most of us would not complain about that one!
The problem arises when we let ourselves and our newly inflated incomes feel that sense of entitlement. You know… that voice inside that says “I’ve worked really hard. I deserve this.” This being anything from a manicure to a new car to a bigger house to a trip to Aruba.
Unfortunately our sense of entitlement can be our financial undoing if we give in to every consumer-driven whim. We’ve all heard horror stories of people who earn amazing incomes yet live paycheck to paycheck, right? It’s because they have been afflicted with entitlement fever!
So how can you keep your standard of living in check as you go forward, achieve career success, and get raises?
7 Ways to (Happily!) Contain Your Standard of Living
1. Keep the same standard of living that you had when you were 28
If 28 was not such a great year for you, pick a different age when you were young and had enough money to get by. Keep that same standard of living no matter what your salary increases to. If you are able to do this, over the years you will be able to save and invest increasingly larger amounts.
2. Bank your raises
You don’t need a new car when your six year-old Nissan runs fine. You need a retirement account and an emergency fund- now THAT will give you peace of mind.
3. Speaking of cars, drive the one you have until it’s dead
Ok, the caveat to this is that it has to be safe. 🙂 But most cars these days will easily run well past 100,000 miles, so take advantage of that. Especially if you have a car that is paid off, enjoy it by keeping it as long as possible!
4. Forget about keeping up with the Joneses
Most of the Joneses in this country are living paycheck to paycheck and have only a pittance in retirement accounts. Strive to beat the Joneses to the retirement finish line!
5. Don’t change your spending just because you got a raise
If you find yourself shopping at retailers that you never shopped at before, you need to ask yourself why. If you are shopping at different stores just because you got a raise, that could definitely be an indicator that lifestyle inflation is creeping in!
6. Continue to enjoy the same low cost entertainment that you enjoyed when you earned less
It’s ok to splurge once in a while! But reading, walking, taking your kids to the park, etc, are all frugal pastimes that are still enjoyable regardless of your salary level.
7. Be grateful for what you have
Be mindful of what’s important in life. In 20 years will you be glad that you bought another purse (or another tool, or whatever)?? Or will you experience more happiness by sending your child to college and/or preparing to retire comfortably?
By the way, my favorite FREE online resource to help manage/budget your money and plan for retirement is Personal Capital (review here). Signing up for a Personal Capital account has really helped us get a better handle on our finances in general, but retirement savings in particular thanks to neat tools like Personal Capital’s 401(k) fee analyzer. They also have all kinds of cool graphics to look at, which is super appreciated by me (I am a total visual person!)
What are some ways that you have found to keep your spending and standard of living in line with your priorities?
Suggested Reading: Want to learn more about ways to contain your cost of living? Check out one of my favorite personal finance books, The Millionaire Next Door: The Surprising Secrets of America’s Wealthy (affiliate link). This awesome book uncovers dozens of secrets of wealthy individuals. Hint: Cost of living is a MAJOR factor contributing to their success!!
Note: This post contains affiliate links.
FI Pilgrim says
Love the advice! I’m especially fond of the “beat the Joneses to retirement” plan. I don’t know my neighbors well enough to see anything besides the external wealth they have, but I’m confident in the fact that I’m doing all I can to save money for the future, and they are probably not.
Sometimes I randomly wonder what the balance sheets of our neighbors look like in comparison to ours… probably wouldn’t want to find out
Kurt @ Money Counselor says
Excellent advice! However, if I insisted on the same standard of living I had at age 28, my wife would file for divorce. 🙂 Joking aside, I get your point. I recently ran across some correspondence where I outlined my monthly budget when I was in grad school. My expenses were $225 per MONTH! I supported myself easily making pizza three nights a week. But you know what–I was very happy with that lifestyle: simple!
Ha! Well you better not do that then! I’d hate to be responsible for a marriage breaking up!! 🙂
Great advice on running the car to the ground! 🙂 Cars unlike other assets, are actually a liability in that it depreciates real quick. To get the most back for your hard earned buck it make absolute sense to use the car as long as it runs! That’s pretty much what I did! 8 years and humming along with the same car!
I’m on 13 years and something like 215,000 miles with my car. It’s been paid off since 2000. I’m not getting rid of it until I absolutely have to (at this point, it is worth far more to me than anyone else anyway!!)
For the most part, we try to keep the same standard of living that we had when we first got married. Hell, my husband is still in a college mindset in some ways. He acts like he can’t afford to buy clothes.
Ha, that’s funny- my hubby is the same way about clothes. I don’t know that he acts like he can’t afford them, but he seems to think that just because he still has his clothing from high school (which was 20 years ago) it means that he is “good” in the clothing department. I’ve just taken it upon myself to get him clothes for birthdays and Christmas so that he actually has some newer clothing!
Green Money Stream says
We pay down our mortgage pretty aggressively. Something I do is to put my pay increases toward increased principal payments on the mortgage. Works well for us!
Awesome!! Smart idea. We are paying extra on the mortgage too; that comes out of our checking account at the same time as our savings right after we get paid, so it’s another way we are “paying ourselves first!!”
FI Fighter says
Great advice! I’m trying to live like I’m still 23, which wasn’t so bad at all. One of the best years of my life, and I was just about broke, so I know spending money is overrated. I’m a firm believer that a right balance can be reached between enjoying today and building for the future.
I think you’re right. I know a lot of people who get big raises and start living a bigger lifestyle, but to look at them it does not necessarily appear that they are any happier!
Jen @ Frugal Rules says
Very well said, no question about that. And yes, you are right. There is no point in keeping up with the Joneses – that is just being envious and envy is never ever right. I’d rather beat them to the retirement finish line as you have advised. That line struck the most.
I think the biggest problem is us letting the outside influence get in. We won’t be having half of the things we own if we weren’t told that we needed it.
I totally hear you. Commercials are the bane of my existence- I mute them ALL.
Syed @ The Broke Professional says
Great reminders. We thankfully get raises every year at my job, and I have made it a habit to invest the new amount or just put it towards my student loans.
Awesome! It feels so good to know that with every passing year that amount is more and more!
I really dislike the Joneses as they have a stronghold on my relatives 😉 I’ve got a BIL who always gives me the third degree about not having a smartphone when I’ve never really needed it. .
That’s really unfortunate. I think some people are so used to the “Keeping up with the Joneses” mentality that it doesn’t even occur to them that there is another way to live- and it can be much better!
I have noticed one major thing as my kids grow, a thought of “I want my kids to have better than I did”, which is a wonderful thing for parent’s to think. But often times my thoughts turn toward stuff, I grew up in a modest family that didn’t have a lot of extra money. Instead of spending money, my parents spent time. Even building fence or other ranch chores have become a wonderful memory of time spent together.
Now, each time I see an expensive toy that I know my kids would love, I don’t buy it, instead I try to make more time to help them plant a little garden or pick flowers. I know that as they grow older it will be the memories of time spent together that last rather than expensive toys.
Love this! I’m trying to do the same with our little one. Whenever I am tempted to buy her something expensive, I remind myself that the gift of growing up in a family on solid financial ground is way better than any “stuff.” Besides, she gets way too may toys and gifts from her grandparents and other people anyway 🙂