My financial success story began when I was young. I don’t have an exact date or age; all I remember was that I was fascinated with big numbers. This fascination with big numbers taught me something very important early in my life. I learned that if I didn’t spend all my money, the number attached to my savings would be bigger. And I liked that! To this day, spending less than I earn has been the biggest contributing factor to my financial success (so far anyway!). In fact, I will go so far as to say that it is the most important financial principal there is. Without following this principal, you can never gain financial freedom, build wealth, or reach other financial goals.
My Financial Success Story:
Everyone has a financial story. So far, mine has been good. Here is my financial story and how spending within my means helped me grow financially:
Learning to use money. My basic financial education began when I was young. My parents gave my brothers and I a small allowance for doing our chores and sometimes for good grades on our report cards. My allowance gave me choices on how to spend my money. I could buy things for myself, buy gifts, pay Boy Scouts dues, or save. Even though my allowance was small, I often found ways to do all of these. As I mentioned, I liked big numbers, especially when my savings account was getting larger!
As a high schooler, I was expected to use my part time job money to pay for gas, dates, gifts, etc. Because I had a finite amount of money each paycheck, I had to learn how to be judicious with my funds.
Uh-oh! Credit Cards! When I was 18, I went against my father’s wishes and I got a credit card. He didn’t think I could handle it, and I thought I needed a credit card to build credit. Thankfully, I had the restraint to use my credit card as a tool. I made one big purchase for $300 and paid it off over a couple months to begin building my credit. I could have written a check for the balance, but I considered the interest charges part of doing business.
After I joined the USAF, I was stationed in the UK. I bought a car there, and though I could have paid cash, I took out a $2000 loan. Why? Again, because I wanted to build credit. I paid the car off quickly and continued to build my credit. To this day I have not taken out any loan that I could not pay off in full at the time I took it. I have only taken loans for convenience or to build credit. (My wife and I have a mortgage, but she purchased the house before we were married). All of this has helped me build an excellent credit rating.
Investing. Because I learned early in life to live within my means, I had extra money. I overheard my Dad talk about his 401(k) and IRAs before, but I had no knowledge of what they were, or how mutual funds or other investments worked. I learned a little about investing and went to a financial planner based on a friend’s recommendation. There I learned brokers don’t always act in your best interest. No, I wasn’t cheated, but I found out I could invest more cheaply on my own with fewer fees and expenses.
Eventually, I learned more about investing and began to invest in IRAs, the Thrift Savings Plan, and taxable funds. Paying yourself first is one of the easiest methods to learn how to spend less than you earn. You won’t spend it if you never see it!
But I never deprived myself. I live within my means, but I have a lot of toys – electronics, instruments, movies, CDs, etc. I have also owned a motorcycle, taken many nice trips, and I prefer to buy quality items even if I spend more. But here is the difference between myself and some people who are in debt: I rarely make an expensive purchase on a whim, I research to find the best deal for my money, and I take my time to decide if the item is something I will actually use.
I am not perfect and I am not rich… but I consider myself financially successful. Why do I think that? Because every month I don’t worry about paying my bills. I know I have enough money in the bank to pay them in full. I don’t worry about bouncing checks. In fact, I haven’t balanced a checkbook in years. I use my rewards credit card and transfer money to pay it off. I rarely write a check and I always make sure I have enough in my account first. I also consider myself to be financially successful because my wife and I were recently able to take a substantial salary reduction because our quality of life is more important to us than money. We could not have afforded to do that if we did not live within our means.
I am financially successful because I spend less than I earn. I know it is an easy concept, but one that is not easily mastered. Thankfully, I learned this at an early age, and still continue to do this. I hope you can learn to do it too. It’s a beautiful feeling.
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