Money is hard. As we grow up, our paycheck seemingly evaporates as quickly as it hits our bank account. With technological progress, we are as detached from physical money more than ever, and typically our money is just a number on a screen.
Retirement seems like a date sometime in the future. You’re contributing to your company’s 401(k) with every paycheck, but who knows if it’s enough. It’s tempting to detach from our finances and just make sure they don’t get out of hand.
We here at Thrifty Trekkers are here to guide you not only in your travel adventures, but also through the terrifying world of personal finance. We find that you can enjoy the things you love (e.g. planning your next trip) by managing your finances effectively and having a plan.
For our first personal finance topic, let’s tackle the mental aspect of money and we will dive deeper in future posts.
Culture of Spending
Have you ever noticed the first question asked after winning a large chunk of cash is “What are you going to buy first?” We live in a culture of spending where we’re trained from a young age that if you have money leftover, then it needs to be spent on something.
We are constantly bombarded by commercials and marketing campaigns telling us we can’t live without the newest gadget or product. And let’s be honest, buying stuff is fun. There’s that ping of adrenaline when you buy something new that is so appealing at a core level.
Build Your Personal Business
Any 1st grader who has run a lemonade stand during their summer holiday can tell you the more you spend on lemons, sugar, and curly straws, the less profit you have leftover for ice pops and hot dogs at the local pool. So why can’t we run our personal finances like a lemonade stand, or any business? More income and less expenses equals more profit. Compounding that profit over decades will get us to retirement and more time to spend at that pool eating ice pops and hot dogs.
This all leads us back to the central theme in personal finance: living below your means. Math tells us that spending 100% of the money we earn will leave us with nothing leftover. Consequently, spending less than 100% means we have more leftover for the future.
View your paychecks not only as the reward for the hard work you’ve put in at your job, but also as the revenue going into your personal business. See all of your expenses on a monthly basis as your personal business’ operating expenses (e.g. rent, food, travel).
Viewed this way, living below your means will be the equivalent to running a profitable business. Spending too much money on eating at restaurants? Better cut some expenses. Income too low? Increase revenue through career advancements or side hustles. We can build a better future by calibrating the income and expense dials in our personal “business.”
What if we spent the same number of hours on our personal finances as we do in our careers? Think of what a profitable enterprise that could be! The first step to becoming successful in your “business” is to make it profitable by living below your means.
Living below your means is only the first stop of our personal finance adventure together. As we continue along, please get in touch to let us know what personal finance topics in which you’re interested!
Great stuff!!