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Live differently now to live differently later

Do you have a desire to live more comfortably financially speaking now and in the future? It doesn’t have to be all about earning more money. The concept of living below your means now so that you can retire earlier and more financially set later is a way of life that is different.
What is the premise of living differently now to live differently later?
As a society we are programmed to keep up with the Jones’s. We have to have a certain car, a certain house and send our kids to certain colleges. The concept really means we have to avoid the urge to keep up with the Jones and focus instead on long term goals. Then later in life, we will reap the benefits sooner and have a better life than the Jones.
What are is one of the most important components of this lifestyle?
First and foremost is to be very selective in adding debt. Only use debt for appreciating assets or for purchases that you also are contributing savings.  And the most important debt to avoid is credit card debt because you could end up paying double because of the higher interest rate you will be paying.
Does this mean this is a no fun lifestyle?
Absolutely not. The real key is to make decisions up front based on what is important to you and not how much money you make. If you want to take multiple vacations then plan for them and save the money.  Just make adjustments in other parts of your lifestyle to accommodate this plan.
What is a critical tool that you need to use to be successful?
You can only be successful by building a budget that is based on what you want to spend and not how much you make. Maybe a better way to say this is that you need to live below your means. And you need to increase your spending much slower than your income climbs.
What are the important decisions when creating a budget?
There are three main areas that are important. First is how much to spend on housing, the second is how much you will spend on  food and entertainment and the third is how much you will allot to savings.  And savings is important because you have at least three and perhaps four important savings buckets.
What are the types of savings that should be in our budget?
Emergency savings is the most important, then short term savings for expenses outside of your budget and finally retirement savings.  A potential fourth saving is for college education if you have children. These savings will need encompass at least 20% or more of your income.
What are the keys to success for this lifestyle?
Probably the most important is that all of your income increases go towards one of the three or four savings categories you have established instead of increasing your housing or entertainment expenses. Fighting the temptation to keep up with the Jones’ is always lurking out there.

Posted: 10/24/2017 with 0 comments

Categories: Budgeting, Loans, Money Matters, Planning, Retirement, Saving, Spending

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