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Monday Jan 23, 2017

Spend LESS Than You Make – Embrace Less

10 June 2009

This post is the second of a series on “spend less than you make”. See also the articles on spending, you, and make.

“Spend less than you make.” Such a simple yet complex phrase. But what does it really mean? This series of posts will take an in-depth look at just what it means to spend less than you make.

What is to spend less than you make? For some, it is the core of their essence, what drives them when they wake up, what they think about when they go to bed. It is what stops them in the store, and what keeps them going to work. For others, it is a catch-phrase, a cliche, a cop-out. It is a mere formality, an obvious understatement, a meaningless phrase.

At face value, the phrase is self explanatory. Spend (as in purchase) less (as in, not more) than you make (your income). What more could be said?

Less is Necessary

Spending less than you make is necessary. Well, technically speaking, in the short term, its not. It depends on the length of time that you’re considering. If you have a bunch of money in the bank, you can easily spend more in a week than you’ve earned working your job. Or, if you’ve ever gone on vacation, you’ve been spending more than you’ve been making, because you’re not making any money! I would say that everybody, at some point in their life, has spent more than they’ve made. Over a short period of time, its definitely possible.

In fact, it becomes even more possible when you consider just how many people are willing to let you spend more than you’re making over the short term. They’re quite willing to lend you some of their money so that you can purchase whatever you feel you need to. They just politely remind you that you need to give it back – eventually, and with a little bit on top for their troubles. There are a million ways to spend more than you make – but only for now.

The problem is, one day, you’re going to have to pay it back. One day, you’re going to have to bring the total in the expenditures column in line with your income column. One day, you’re going to have to pay for the things you purchased.

That’s why spending less than you make is necessary. Anything else is unsustainable.

You can do it for awhile, and there’s all sorts of tricks to keep it up; like paying off debt with more debt, pushing balances around on paper, but the simple truth is that it won’t last forever. One day you’re going to be held accountable for the money that you spent, one way or another. You can keep running and hiding, if you’d like. A lot of people do. Or, you can stop spending more, start spending less, and pay as little interest as possible.

Less is More

However are you going to manage to survive spending less? Don’t you need to keep purchasing and buying and consuming? In fact, don’t you need even more money so you can buy even more things?

No. You don’t.

Actually, a lot of people of learning to live on less. Not only is it manageable, it is often preferable. The ethic, the ethos, the mantra of less means that there are less things to get in the way of what you really want. Instead of becoming a slave to the closets and storage rooms of crappy goods and disposable purchases, sell what you don’t need or use on a daily basis, and find peace in the empty space. Stop being afraid of silence and downtime. Start embracing sustainability.

Spending less is easy as soon as you change your mindset. More things, more purchases, more expenses will not save you, they will trap you. Realize that less is more.

Less clutter means more room, more space, more freedom. Less clutter means less time cleaning, and sorting, and organizing, and picking up, and repairing, and replacing. Less clutter means more time for family, friends, a good book, a vacation, for relaxing.

Less spending means more saving. Less spending means more emergency funds, more discretionary money, more for planned spending. Less spending means less debt, less interest, less payments.

Less work means more time at home, at play, in the park, on the mountain, by the ocean, in the sun, on the deck, in the hamock, with your kids. Less work means less stress, less commute, less responsibility.

Less Isn’t Difficult

Less is an incredibly simple math problem.

[Income] – [Expenses] = More or Less

You either get a positive number, meaning you spent less than you made, or you get a negative number, meaning you spent more than you made.

Spending less requires just two things, then:

  • Knowing how much you made [Income]

Do you know how much you make? A lot of us think we know how much we make, but the math is always a little fuzzy. Is your paycheck the same every two weeks, or does it change? Are your withheld taxes different this year from last? Was your raise as much as you thought it was? Did taking a day off affect your paycheck? Have you been keeping track of your paycheck? Have you read over your paystubs to ensure they are accurate? Do you know what your networth is?

  • Knowing how much you spent [Expenses]

Do you keep track of your expenses? Do you use an online aggregator, like Mint or Rudder [my review]? Do you use a spreadsheet, to track your spending? Do you save receipts, do you live on a cash budget, do you write down your expenses on daily, weekly, or monthly basis? Do you include birthday money or gift cards? Do you know what your fixed expenses are, and how you can reduce them?

How do YOU find less in a world of more?

About the Author

Bank Guru

My real name is Banking “Guru” Smith, yes my parents were bankers and believed that I one day would become a famous banker just like them. I enjoy a double-double coffee, super long lines at the grocery store and annoying CSR’s (Customer Service Representatives or more commonly known as ‘Tellers’). You will usually find me working behind the scenes, I let Sensei generate all the attention. I also forgot to mention that I invested in Madoff, think I will ever get my money back?

Comments (3 )

Jeff Hawker Wrote:

This is very important.

ctreit Wrote:

We often overlook the responsibility of ownership. When you own stuff you got to take care of it. Otherwise it wastes away. It took me a while to understand that "less is more".

Matt Goulart Wrote:

It took me awhile to understand that less is more too. Actually, I’m still working on learning it. I feel as though it is a process, something I have to learn again on a daily basis, or a per item basis. It’s something that I struggle with, but desire to achieve.

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