Fiscal Discipline Is Not Self Sacrifice

If I could teach people just one idea on getting ahead with money this would be it. Fiscal Discipline Is Not Self Sacrifice. It goes without fail that anytime a conversation about money comes up and I am asked what I do to save money, the other party will say something to the effect of “There’s no way I could give up my lifestyle to do that,  saving that much money is too difficult.”  Immediately the other party goes to an “either/or” equation.  The viewpoint that in order to be fiscally disciplined you have to give up everything in life and be a miser. This just isn’t true, in fact I don’t even miss the vast majority of the money I save, because it came in the form of wage increases that I just added to savings.  Since my lifestyle never adjusted to the extra income, I don’t miss it.  I honestly couldn’t fathom spending the money I save.  Does this sound like a good place to be? If you are willing to adjust your viewpoint on money, you can also save a ton of money while leading a rich life as well.

Fiscal Discipline Is Not Self Sacrifice:

Fiscal discipline isn’t self sacrifice, it is a symptom of setting priorities and working towards them. My financial priorities are simple: Pay off my house by age 35 and reach financial independence by age 45. Before I spend money on anything I ask myself, “Does this expenditure help me achieve my long term goals?” If the answer is no 9 times out of 10 I walk away.  Teach yourself this amount of self disciple and it becomes second nature.  Focus on needs, not wants and before long your “wants” list reduces dramatically.  Keep in mind I don’t NEED to have my house paid off by 35 and I don’t NEED to reach financial independence at 45, or at any age.  Human tradition is to essentially work until you die.  I WANT to achieve these things and my wants for these financial milestones are much greater than my wants for a new big screen TV, a PS4, a new truck, and dinners out 3 times a week. “You can have anything you want, you just can’t have everything you want.” If financial freedom is the anything you want, then the everything else becomes less necessary.

Ultimately fiscal discipline is the opposite of self sacrifice because instead of sacrificing your time to work for toys and gadgets, you forgo the toys and gadgets to buy your time. Having control of your time is the most self rewarding thing any human can do.  fiscal discipline isn’t self sacrifice, it is self aggrandizement.

Bank Your Raises:

I touched on this in the introduction, but banking raises to me is the easiest way to increase your net worth without feeling like you are denying yourself something.  If you start out making $30,000 a year and you’ve already learned to live off that amount, then when you start making $50,000 a year banking that extra $20,000 shouldn’t be too difficult. What’s really cool is when you increase your income to $60,000 and all of a sudden you are saving half your income! And it took no “loss” you simply never increase your discretionary spending to begin with. While banking your raises (and extra money earned by simply working more), focus on reducing expenses that provide you with little marginal utility.  All our budgets have some things that we spend money on that do us little good, find those and kill them to increase your savings rate further.

Don’t Compare Your Lifestyle To Your Broke Friends

The vast majority of my co-workers drive to work in relatively new trucks. I don’t envy them, because I get 95% of the utility that their trucks offer them at around 5% of the cost. It’s not a bad thing that they are driving nice trucks, it simply means they have a different set of priorities than what I do. If you look at what other people have and want the same thing, YOU WILL NEVER BE HAPPY.  There will always be someone earning more money and buying cooler toys than you.  Getting sucked into the “keeping up with the Jones’ ” philosophy in a suburban arms race is no way to go through life.   If you must compare your lifestyle to others, look at people through the history of mankind to reaffirm how great you have it and how living off of $20,000 a year, or $30,000 isn’t that horrible. The array of modern conveniences that are available even to low earners are astonishing:

1. You have access to inexpensive and plentiful foods all year round. As a function of percentage of wages, food is far cheaper and more diverse now than at any time in human history.

2. You most likely have a refrigerator, which lower end models run around $400 new, and you can routinely pick up used ones for around $100.  Before World War 2, refrigerators were a luxury item.

3. You can flip a switch and have safe artificial lighting any time of the day.  With the electrical power grid and the mass production of electricity, we enjoy cheap power that not even the richest men in the world had access to 150 years ago.

4.  There are devices like the Amazon Fire Tablet for as low as $50 that can connect you to the sum total of all human knowledge AND allow you to communicate with literally anyone, anywhere in the world instantly.

When you look at things like this as amazing blessings it is much easier to feel happy about what you already have, rather than allowing your lifestyle to creep up and steal away from your savings potential. When these items are seen as luxuries, it is easier to pass up other more expensive luxuries.

Currently I I am able to save over 33% of my income and I certainly don’t see it as a sacrifice.  My goal for 2016 is to reach a 50% savings rate and I have a stretch goal of a 66% savings rate for 2017. Why? because a 50% savings rate means that for one year worked I earned a free year.  A 66% savings rate means for one year worked I earned 2 years of not working, likewise a savings rate of 33% means I “only” earned half a year for 2015.

Life’s about setting goals and achieving them, is financial freedom one of your primary goals? Do you feel like working towards it is a sacrifice, or an awesome gift you are giving to your future self?


John C. started Action Economics in 2013 as a way to gain more knowledge on personal financial planning and to share that knowledge with others. Action Economics focuses on paying off the house, reducing taxes, and building wealth. John is the author of the book For My Children's Children: A Practical Guide For Building Generational Wealth.

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