Most people do not feel like they are living an excessive lifestyle. In fact, if you ask, people have a much greater awareness of areas where they contentiously hold back or make tough financial choices. It is also true that most people spend a lot more money than they wish and rarely meet their savings or investing goals. One of the problems we face in the western world, is that we have unconsciously designed our lives to be expensive. We fill our lives with lifestyle habits that elevate our monthly fixed costs. From mortgages, debt payments, insurance, utilities, basic food, childcare, communications, to transportation- we often set our expense expectations without ever spending a dollar of true discretionary money. For many families, our basic obligations are enough to consume the vast majority of our disposable income. When all of our money is already expensed, we rarely have any margin. And we certainly feel richer when we have plenty of that margin in our lives.
We don’t wonder out of an expensive lifestyle. But we can certainly wonder into one. To redesign our lifestyle, it takes a bit of reflection, introspection, and evaluation to motivate change. In addition, most Americans live in a perpetual time deficit so we resort to spending more to try and make up the lost time. We hire out anything we can and tend to spend excessively on the people we love- often to make up for the quality time we wish we could spend with them. Overall, we create a lifestyle that becomes very expensive to maintain. However, we do have a choice. We get to choose how we want to design our life. It starts with a few observations and small steps.
Expectation of Peers
The amount you spend on a wedding, car, home, or even a diamond ring are all heavily influenced by your peer group and social surroundings. Our expectations about transportation, kids’ stuff, entertainment, vacations, and gifts are also strongly swayed by our family experiences and the people we surround ourselves with. We must take a minute to understand our surroundings. Do our friends and family expect us to spend a lot of money? Do they have minimum expectations for what constitutes a suitable home, vehicle, vacation, or gift? Just starting with observing our influences can be pretty eye opening. Are we expected to live an expensively designed life?
I will continue to harp on transportation because it is surely the most underestimated expense in the average first world’s household. For a rough estimate, just take the number of miles you drive a month or year and divide it by half. In total, you are probably spending at least that much on your vehicle transportation. For someone who drives 20k miles a year, the average expense would be well over $800 a month. If your family owns multiple vehicles, the numbers can add up really quickly.
Transportation is often one of the last considerations we take when choosing a place to live but it can be one of the key decisions to designing an expensive life. Choosing a location that is walkable or bikeable can dramatically decrease your needed expenses and also provide you with additional lifestyle benefits (time, health, money). If you must drive a car, try and minimize your driving time or live near public transportation. This will often save money, time, headaches, and the stress of long commutes. Elevate transportation as a consideration when choosing where to live!
After spending a few hours in whole foods, I’m pretty sure there is no limit to the amount of money we could spend on food each month. Kids can be as expensive or as inexpensive as we want them to be. And clothing may or may not be an area where you spend a lot of your hard-earned dollars. We often tend to buy the same things over and over without really thinking about what we are buying. We cook the same things, wear the same brands, and treat our kids to the same things their peers expect. I’ve found that intentional travel has fundamentally shifted my paradigm on what is needed for joy when it comes to food, kids, and clothing. I’ve spent a lot of time with extremely low-income individuals who spend almost nothing on all three and live happy, healthy, fulfilled lives. Consider taking a month to reset your own personal expectations on what is needed for joy in these areas of life.
The more money we make, the more money we are expected to spend on entertainment. Due to the high opportunity cost of relaxation, we tend to spend a lot for recreation and leisure. In fact, we often stress ourselves out with tons of planning, travel, hassle, and work to get to a point where we have a few days of ‘stress free’ relaxation. For many people, spending time locally, out in nature’s beauty can be one of the most fulfilling, relaxing, and inexpensive ways to spend free time. My family tends to travel a lot but we are transitioning to a point where I’m looking forward to spending more time just exploring all the beautiful areas and natural wonders within a short ride from our house. Again, take a few minutes to inventory what it takes for you to truly relax. What do you actually enjoy about entertainment and vacations. Do you really need to spend hundreds or thousands of dollars to entertain yourself?
Unfortunately, the gift giving process has become so burdened with expectations that it can be really stressful for many of the people I know. In addition to the financial stress that it induces, making sure gifts are socially appropriate can be mentally taxing as well. Giving things to other people can be really joyful, but the commercialism that has taken over giving events has actually clouded the entire process. I still like giving gifts, but I’ve gotten tired of the half-hearted, obligation gift giving that tends to make up most of our experience. I tend to push back against socially expected gifts, but I thoroughly enjoy well thought out special gifts for people who are important to me. I enjoy received gifts in the appropriate context as well. Take a few minutes to personally examine if you are truly getting happiness from gift giving or if you are participating in the half-hearted commercialization gift expectation that has hijacked the art of simple generosity.
Large houses, expensive communication packages (cable, internet, cell phones), and fancy habits all build upon our expensively designed life. An expensive life tends to dictate our work life balance. Once basic levels of expense get high, we are forced to work more and more to simply maintain our basic expectations. For further reading check out the book Your Money or Your Life, the mandatory article on Rapitude about why your life has already been designed, and check out Mr. Money Mustache’s guide to designing an inexpensive, awesome lifestyle. Living simply, we can design a life that leaves more time, money, relaxation, and margin. If you have little control now, take steps to make sure your life looks different five years from now. Live an efficient life.