Today was the most excited I have been at work in a long time. It wasn’t because of a raise, free lunch or even a surprise during “office hours” Happy Hour (yes, we sometimes get beer during work hours). During an 8.5-hour offsite team event, the head of HR broke me out of a trance with a surprisingly spot-on personal finance lesson about living beyond your means.
It started with a section of his powerpoint called “unsolicited career advice.” He talked about ways to get promoted and how important it is to get experience in multiple areas. Blah, blah blah, generally I agreed with everything he said but it seemed like boilerplate HR talk.
Then he completely switched it up and threw up a slide that said “Living beyond your means” and launched into the below story:
I was meeting with a younger sales associate that was doing an exceptionally well job and earning a great salary for someone his age. Although he was making good money, he was not loving sales and was interested in another opening we had at the company. Everything seemed to be going great until we hit the salary for the new position.
Immediately after hearing it, he looked up at me and said: “I can’t afford to live on this.”
The following week, I watched the same 25-year-old get into a brand new BMW (while I was driving my Hyundai Elantra). At that point, it clicked that living beyond your means can take choices away from you.
If you have to earn $95,000 so you can spend $96,000, you need to re-evaluate your spending habits. Don’t let money be the reason you can’t do something you want to do.
Don’t Limit Choices by Living Beyond your means
A 25-year-old made the decision to keep doing something he did not enjoy because his lifestyle was too expensive to switch to a lower paying job. The kicker, he was most likely looking at a short-term setback in pay.
The bulk of my focus has been on giving myself the choice of early retirement. But controlling spending and living below your means opens up so many more choices. Maybe you or your significant other wants to take on a lower paying passion job. Or one of you wants to take a full-time break to raise children.
These conversations probably don’t even happen if you are spending everything you earn and then some. Once the bills start piling up, the focus is “How are we going to pay this” instead of “How do I want to spend my time?”
Did the message sink in?
I took a few looks around and saw most of the people on their laptops or cell phones. A few of my peers that don’t know about my background were cracking jokes about not being able to live on their current salaries because they were too low. Part of me feels like they were simply making jokes to justify their current habits. I know each and every one of them make a livable salary and then some.
The message did sink in with me, even though we already live well below our means. Thinking further about the number of choices we have today made me feel good. If an opportunity comes up or one of us feel strongly about switching it up, we can make it work.
I thought it took some guts to deliver that kind of message in front of 200+ people. Even telling friends they are bad with money is difficult, but he took it to a new level.
Are you living beyond your means?
Here are a few of the indicators you may be living beyond your means
- You are in debt or adding to it – Spending more than you earn is the number 1 sign you are living beyond your means.
- Can’t save a meaningful % of your income – Depending on your goals you should be saving at least 10% of your income. And much more of that if you are planning on retiring earlier than 65
- Buying Status Symbols – Buying things you don’t really need? Empty rooms in your house? Cars that show how much you make instead of how much you have saved? Spend on things you truly care about and ditch the rest!
How to combat living beyond your means
You have to shift your spending mindset away from buying things to buying only the things you truly enjoy. Some examples:
- If you only golf twice a year do you really need new clubs?
- Do you enjoy the overpriced lunch 5 days a week to the tune of $60 instead of $10 to bring your own?
- If you had the option to buy time instead of what is in your cart at Target, what would you choose?
A few small changes can make a big difference and if you want to make some bigger changes, check out where 50% of the average Americans money goes every year.
The best thing we have done to live within our means is automatically save part of every raise or salary increase we get. Take the money before you ever even have it and sock it away.
Some resources for readers in debt:
Living Beyond Your Means – Take Away
99% of the time your employer does not have any business telling you hot to spend your money. But in this instance, the message was spot on. I am glad he put it out there and hopefully at least 1 person listened. The longer you outspend your income, the deeper hole you will be in.
You don’t know what opportunities are coming your way, make sure you are ready and can Take Action if interested. Freedom is a powerful motivator, but being able to choose how you earn money is powerful as well.
Are you limiting your choices by Living Beyond Your Means?