In our pursuit of “The American Dream.” the thought of limiting our lifestyle, so that we are not spending every dollar we make, is foreign and unappealing. Few people want to do that!
However, the day will come for each of us, sooner or later, when we won’t be able to continue working at our jobs. Our income will shrivel to whatever Social Security benefits might still be available, plus the amounts we have put aside in savings and investments. For some of us, that conjures up a pretty dismal picture!
As scary as that may be, we still resist any limitations on our current spending habits. In our consumer driven society, there is always something bigger, better, nicer, prettier, newer, and more stylish than what we already possess. And it’s also true that no matter how much money we bring home, there will always be something that comes along to catch our eye and dig into our pocketbook.
We need to realize a simple fact: any money we spend on lifestyle is simply consumed and gone — forever! We will never get it back. It can never go to work for us. It is just simply gone!
We can’t eliminate all lifestyle expenses. But until we finally understand that only money we don’t spend will be available for our future use, we ‘ll not likely be open to any discussion about limiting our lifestyle expenditures and purchases. Once we come to grips with the reality that awaits us, however, we will finally see the wisdom and prudence of such limitations.
That’s why we advocate putting a “ceiling” on our lifestyle at as early an age as possible, no matter how much money we make. Failing to do so will keep us from allocating the funds we will need later to sustain our retirement years. The lifestyle we insist on enjoying today will set up the type of lifestyle we will experience in the future.
Because too many of us live only for the present moment, we never contemplate what life might be like when aging issues or health limitations make it impossible to continue trading our time and energy for money. At that point, only what we’ve set aside in savings and investments will be there to sustain us.
Developing the financial discipline that will enable us to create a future lifestyle like the one we enjoy today may not be easy, but should be the goal of each of us. That takes planning. It requires the willingness to put our spending in “check” and begin systematically laying aside funds that will help produce the future we desire.
Some financial vehicles do a better job than others in helping us achieve our future goals. But understanding how money works can be even more important than choosing the right financial tool.
Allow me to introduce you to some little-known principles that will arm you for your journey and give you confidence to navigate the murky financial waters ahead.