December 15th, 2015

My parents always ignored the advice to 'live within your means' and retired in their early 50s, and now I'm following in their footsteps

elizabeth aldrich homeCourtesy of Elizabeth Aldrich

Summary List Placement  
  • Growing up, my dad was always frugal despite his engineer salary.
  • My stepmom taught us that rather than living within your means, you should strive to live below your means.
  • Thanks to my parents, limiting my consumption and avoiding lifestyle inflation come naturally. I keep my fixed expenses as low as possible, even as my income increases, and this trick is responsible for my financial security.
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Truth time: I'm an impulsive spender, a lazy budgeter, and a reluctant saver. By most measures, my financial life should've been a lot messier.

However, there's one lesson my parents drilled into me that always helped me stay afloat, even through my most irresponsible early 20-something years. My stepmom always said, "Living within your means is good advice, but living below your means is better." My dad exemplified this motto all throughout my life, and I'm so glad it's one habit that rubbed off on me.

Thanks to this lesson, I felt a strong sense of financial security by the time I turned 30, despite bouncing around from job to job throughout most of my 20s. That sense of security has stuck by me even through income loss and the pandemic. Here's how I learned it growing up and how I've implemented it in my adult life.

My parents practiced what they preached

We always lived well below our means growing up with my dad. My sister and I used to poke fun at him for being an engineer who carried a flip phone until 2015. My dad drove cars until they stopped working, and never seemed the least bit concerned about keeping up with colleagues who were probably buying new cars and the latest phones.

Even when my dad and stepmom got married and became a dual-income household (both of them engineers), they drove around cars that were 12 years old and bought a house together that was half of what they could actually afford. Now, they've retired in their early 50s and have plenty of money to travel the world and live comfortably. 

They always told me that living this way had no negative impact on their happiness — in fact, they said it made them happier to not constantly worry about materialistic concerns. Of course, a big part of why this worked so well for all of us is that we always had everything we needed. We couldn't get new jeans until our old ones were worn out, but we could get new jeans. When you grow up without your basic needs met, it can be a lot more challenging to embrace the "live below your means" lifestyle. I'm grateful that I had everything I needed, but also that my parents weren't constantly buying things we didn't need.

  How this lesson helped me become a financially secure adult

This mindset now comes second nature to me. The thought of buying a new phone or car when my current one still works makes me uncomfortable. 

I'm all about keeping my fixed costs as low as possible so that I can maximize my disposable income. I don't have a car payment, and as of a few years ago, I'm officially debt-free. I've never spent more than 25% of my income on housing, even when I made $12 an hour or $30,000 per year. My salary is now around $75,000 but I'm still spending the same on rent as I did when I made $40,000. 

This has required sacrifices like living outside of trendy areas, taking public transportation, and living with roommates, things not everyone is willing or able to do. I might also be guilty of taking it a little too far at times, just as I used to accuse my dad of doing while growing up. I carried around my last phone for two years after the screen had cracked even though I could afford a new one. Despite the sacrifices, it's been worth it to have more disposable income.

Sometimes I save all my disposable income, like when I saved $10,000 in three months during the pandemic to replenish the emergency fund I had to dip into. Other times, I spend all that disposable income on a big vacation. Having such a roomy budget means I can spend impulsively occasionally, and it means that my finances are usually fine even if I get lazy and stop budgeting for a while. 

This flexibility in my budget makes me feel more financially secure and makes it hard for my finances to spiral out of control. If an unexpected expense comes up or I lose work, I'm able to cut my spending dramatically and rely on emergency savings. If I absolutely needed to, I could get my monthly expenses below $1,500, and I could do it almost immediately.

Some might see the way I live as strange or uncomfortable for them, but it brings me so much financial peace of mind to know that my debt and fixed costs are minimal and I have a good amount of money in savings. To me, that's financial security.

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