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Never live above your means.
After graduating college, I heard this a lot. Just two weekends after crossing that rickety stage, I was sitting at a sports bar with my friend, Hannah, having a few drinks, when two middle-aged men asked to sit with us. We were raised to always be polite, but we were also young, and therefore always down to receive free drinks from men who wanted to sit around and compliment us. So we let them sit with us. Naturally, they asked about our lives and the conversation turned to the fact I had just graduated college and was on the job hunt. Even though I didn’t really want to talk to either of them (the one sitting by Hannah was super skeevy), the guy sitting by me was a generally nice guy, and he actually gave me this nugget of advice.
I thought, “Wow, that’s actually good stuff. I’ll remember that.”
God laughed at that plan. While I’ve done pretty good staying within my financial limits (I have no credit cards or debt of any kind), I have over-extended myself unintentionally. A year into my career (hey, that rhymed!), I signed on for a lease that I knew was expensive, but convinced myself would be no big deal. I haven’t gone hungry or had to move in with my parents, but it has been a daily struggle to stay within my budget. Every little expense has to be accounted for and planned out. I don’t get to go buy a Starbucks venti skinny vanilla latte with soy milk on a whim anymore. Instead, I stick with the Maxwell House from my apartment. I’m officially living above my means and paying the price (literally).
The thing is you can receive a golden bit of advice every day, but if you don’t actively think about it during important moments it won’t do you any good. For several months, I was diligent in my intention to not spend more than I feasibly could afford. Then I got too comfortable with the idea another paycheck would arrive, so spending a little extra that pay period didn’t scare me when it should have. That’s how I was able to justify signing on for a lease I can’t handle easily. It’s easy to fall into this trap. The habit of living above your means can sneak up on you. Before you know it, you’re counting quarters and dryer sheets like your grandma.
So how do you avoid this slippery slope? This is what I should have done.
Budget Like a Maniac
I started budgeting when I was officially on my own, but I didn’t really account for all of my expenses or plan how I was going to use my money. At least not in the way I should have. I would budget for savings, rent, gas, food, and utilities, but I didn’t set a limit on how much I could spend on drinks at the bar, coffee runs during the week, or shopping on my lunch break (this was a frequent activity my coworker I liked to engage in). Whatever money I had left after my important expenses was open to be used however I wanted, whenever I wanted. This was not my smartest money move.
Then, I was living in a much more affordable home with two roommates and my living expenses were incredibly low. Technically I could afford to be so casual about my spending, but I should have been learning how to set limits and prioritize that spending. The ability to set a budget and honor it in all areas of spending is a skill I’ve had to learn under duress, and it’s been unnecessarily stressful. If you think you might be too lax with your own budget, then you need to take inventory of your spending. Coffee runs, gas, weekends out, Target trips (maybe only go in with cash to be safe), and even vending machine splurges need to be something you’ve planned out in your budget. It seems like a lot, but you have to plan for every potential expense.
Stick to the Budget Like your Life Depends On It…
Because your independence certainly does. Keep yourself accountable. Unless you have a significant other who can help you budget and monitor spending, you’re the only person who can keep you accountable. It’s one thing to take the time to set a killer, flawless, foolproof budget. But it won’t do you any good if you don’t actually follow it. Unless you are truly committed to your budget, you’ll easily slip into the vicious cycle of living above your means just like I did. And the sad thing is you might not even realize it.
Potential effects of not sticking to a budget include: weeks living off of canned tuna and ramen noodles, skipping out on social events you really want to attend, selling stuff simply to make it to payday, using savings, asking for loans from friends or family, and shame for being in these situations. Doesn’t sound desirable does it? Trust me, it’s not. It’s stressful and scary. Therefore, STICK TO YOUR BUDGET COME HELL OR HIGH WATER.
Test Out a New Expense (Before Committing)
I tried to do this before taking on my absurdly high rent, but I didn’t follow through with it. I intended to put away the amount I would spend on rent and only live off of what remained to see how well I could handle it.
That didn’t happen.
I kept telling myself I would test it out the next month. So of course, when I was actually in the situation, I panicked. I cried over my budget. I broke out from the stress. I couldn’t sleep because I would lay in bed freaking out over the $5 tub of hummus I bought at the grocery store.
It took a few months for me to adjust to a new frugal lifestyle. While I can say I’ve learned a heap about the difference between need and want, I won’t pretend to be okay with the lack of shopping and travel in my life. If I had followed through with testing out this lifestyle, I can assure you I wouldn’t have signed this lease.
Don’t do as I did. Actually test out any financial obligation you’re considering. It doesn’t matter if it’s a higher rent, a car payment, insurance, or phone bill. Test it out by placing that extra amount of money in savings, and don’t touch it. Otherwise, you won’t know if you can really handle the financial burden.
Inventory Your Possessions
Purchasing items you don’t need and likely already have is one of those sneaky ways you end up living above your means without meaning to. This might not seem that important, but you need to have a clear idea of what you own so you don’t spend pointless money on repeat items. I have 4 white t-shirts, so I don’t need to buy another one. If I didn’t know how many I actually had, I’d be much more likely to purchase more because I love white t-shirts. This also helps you know the difference between what you actually need and what you simply want. Yes, I want all of the coffee cups. No, I don’t need them.
Think about all of those little items you purchase on a whim. Everything from a 30th bottle of nail polish to another travel coffee mug adds up and can push you over your budget. When you find yourself reaching to buy something on impulse, stop to think about whether or not you truly need it. Chances are you don’t. Walk away.
Talk Money with People You Trust
You should talk to people about money so you can a) receive helpful advice from those that have been in your shoes, and b) explain where you are financially so people understand why you’re turning down that $80 concert ticket. Keeping your financial issues and questions to yourself only serves to isolate you and leave you without any emotional support.
It’s particularly important to talk to your parents about money. Whenever I feel stressed about how much money I’ve spent, don’t know how much to save, or need an explanation of something, I call my dad. He never judges me for spending more than I should have (though he’s been adorably concerned about my money situation from the start of this lease. Bless him.), and he always helps me figure it out. You don’t have to talk to your parents if you don’t want to, but you need to talk to someone about it.
If you talk to someone about a financial commitment you’re considering, and they’re worried it’s a bad idea for you to take it on, listen to them. My dad did not want me to take on this lease. He repeatedly told me not to do it, but I insisted I could handle it. I’ve handled it, but I could have avoided all of this stress. Listen to the people who have more real life experience than you do. Learn from their mistakes if you can.
It’s also helpful to be open with your friends when you’re strapped for money. Everyone is open about this in college. If you have $30 for the week, you simply told your college friends and they wouldn’t push you to spend it for no reason. Balling on a budget isn’t something anyone tries to hide.
Once you enter the real world, though, you start to clam up about your money issues. Don’t hide the fact you can’t afford to go out and drink at the nicest bar in town. Tell your friends that you need to keep spending within a certain limit, and tell them why. Trust me, they won’t judge you for it if they’re real friends. Most 20-somethings are struggling financially in one way or another. Start talking.
Your twenties are when you lay the foundation of your money habits, so take it very seriously. As long as you stay mindful of your income and spending habits, you can live within your means. Think before you spend, ask for advice, be clear about your budget, and stick to your guns no matter what.