Does it seem like everyone around you is living large? Driving a new car, drinking store-bought coffee, and eating meals out all of the time. Your perception will be largely influenced by your own current financial situation. For us here at MindYour2Cents, we often feel bad for people we see living large, because we know the struggles which often accompany it.
Why would we feel badly for people who seem to be riding high on the hog? Because we know it is often a façade, nothing more than an elaborate house of cards which could crumble at any minute. Surveys consistently show almost half of all Americans have zero savings, and this group includes people who make good incomes. Many people spend all of what they earn, living as wage slaves, hoping and praying an unfortunate event doesn’t affect them.
How do people get themselves into these situations? Mostly because they favor instant gratification over long-term benefit. The wise course of action is to build an emergency fund, and then start investing to build a passive income stream, but that isn’t always perceived to be as much fun as buying something now. Sometimes people enjoying having things in the present so much that in addition to spending all of their income they also acquire high-interest debt.
At MindYour2Cents we aren’t about saving and investing simply to have more money on paper; we believe in living a richer life. Part of living a richer life, is having peace of mind with many things, including personal finances. A person driving an older car may actually have more wealth, including an emergency fund and investments, than someone driving a brand-new luxury vehicle they bought on credit. You would be surprised how much car purchases can affect long-term wealth and progress towards financial independence.
We have things we enjoy purchasing, as well as worthwhile experiences we spend our money on. But, we never forget to pay ourselves first, and fund our savings and investments prior to making those purchases. Things, and experiences, are much more enjoyable when they aren’t linked with stress-inducing debt.
The other thing we believe is you will never be happy comparing yourself to others. A big benefit of financial independence is it brings contentment and a sense of achievement. The contentment comes from knowing you could purchase more things, but you choose not to. The sense of achievement comes from knowing you are meeting the financial goals you have set for yourself. When you realize your consumption is a personal choice, and one you have control over, you feel a sense of power over your future. And, you feel badly for those around you who are toiling away while trying to maintain the illusion of wealth.