Tuesday, September 15, 2015

I Live Paycheck to Paycheck, On Purpose

That title may sound a little misleading, and certainly some people are probably thinking I don't save money, when in reality I save a lot. Rather, after every paycheck I save some money, I put a lot of money toward my loans, and then in parallel I contribute quite a bit to my 401(k) at work.  The point is I don't leave all of my money in my checking account burning a hole in my pocket. When I look at my checking account a week before pay day and see only $300 there, I feel the need to save a little money.

There is a lifestyle creep that happens to many people, maybe most people, when they enter the working world. First everyone lives like a poor person, using free furniture, living in a small space and going without big luxuries. Then as the bank accounts grow people start spending more money. In other words, wealth determines spending more than income. Of course you can view income as microwealth payments.

In my mind the money in my checking account is my disposable income, and my income for my bills. Every other account has some long term purpose from a house to vacation (my next mountaineering expedition) to retirement. By keeping my checking account value relatively small I feel like going out to eat is a big treat, but buying a new car is unaffordable, even though it isn't. Instead of the American "more, More, MORE!" I aim for an attitude of being content with what I have, and happy for the many small luxuries I do enjoy that people in poor countries do not enjoy. I still get thrilled to have a $4 coffee.

I'm not entirely sure how to cultivate this sort of attitude. I think being exposed to poverty helps. I think being unemployed was a huge benefit to me for financial training. Growing up in a family with below average income helped. Graduate school helped because for 18 months I was making money, but very little money, so I learned to budget and save. Again, the purpose is to be comfortable and content with what you and I have, because the longing for more will never fulfill you.

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