Have you ever thought that it was time to consider downgrading your lifestyle to cut expenses? Downgrading your lifestyles sounds painful. It sounds like something is being taken away from you. Instead we can call it aligning your lifestyle. You can ask yourself: Does your lifestyle enable you to become the best version of yourself? If it doesn’t then there’s the option of aligning it.
In my life I’m considering a re-alignment because of several reasons. I am going to deplete my savings to replace my car within the next couple of months. In four months I will be purchasing a certificate program to become a Certified Financial Planner, further depleting my savings. Within the next year I plan to re-start my career at an entry level position in the financial planning industry. In other words, I will most likely experience a drop in my income. And finally, in the next few years I would love to launch my own practice and become self-employed. This will require a nest-egg to get me through the initial three years.
I am very vigilant about avoiding lifestyle inflation, however, I rarely look at cutting things out. The last time I seriously looked at cutting expenses was five years ago when I began my debt payoff journey. Given all the upcoming changes in my income and the major upcoming expenditures I have begun to consider what else I can cut out. And let me tell you a little secret: it is painful to consider cutting anything out.
What’s the why?
I’ve shared what has led me down this path, but what would get you to consider re-aligning your lifestyle? It could be one of the following:
An unexpected expense that is beyond your current savings
Examples of this abound. Say your car needs to be replaced, you’re having a baby, your house requires major improvements, a recurring medical issues comes up, etc., etc. You get the idea. Regardless of the reason for the expense, it is more than you can afford without going into substantial debt
You expect a decrease in your income (or are currently experiencing it…)
Maybe you’re going back to school. Maybe you’re retiring. Maybe you’re taking time off work or will be working part-time in order to care for family. Or maybe your boss gave you a pink slip. Whatever it is, your income is no longer what it used to be.
You want to build up your savings or pay down your debt faster than you can with your current lifestyle
What if you dream of traveling across the world? Or of stating your own business? Maybe you want to give a substantial amount of money to a cause. Or maybe, you just want to be free of the ball and chain called consumer debt. These are just some examples of the many dreams that require a drop in expenses before they can be achieved.
You are unhappy with your current lifestyle
It may be that you are tired of having so much stuff to maintain and insure. Last year I visited Cuba and I came back feeling my lifestyle was too extravagant with all of the eating out and an entire 750 square foot apartment all to myself. Or it could be that you have realized that you cannot actually afford your current lifestyle and are paying for it with debt and loads of excess financial stress.
There are many other reasons for wanting to align your lifestyle. The list above is a sample of broad categories. Regardless of your reason I’d suggest you proceed deliberately.
Aligning your lifestyle can have a painful adjustment period. Robert Cialdini, an expert on the science of influence and Professor Emeritus of Psychology and Marketing at Arizona State University, states that this is due to the scarcity principle. This principle states that when something becomes less available we value it more and thus want it more. For example, I currently live alone and I am completely free to to use whatever part of the house I want and listen to music as loudly as I want with or without pants. Where I to get a roommate to lower my housing expenses I would need to adjust. My first instinct is to imagine the changes I’ll need to make will be overwhelming. In reality however, I spend most of my time at home at my desk in silence wearing a skirt. I am certain I can find a roommate who would be okay with this.
What do you do to align your lifestyle?
Once you decide that you need to align your lifestyle in order to reach your dream, you then get to decide what needs to be changed. Start by writing down your expenses and placing them into buckets of what can be changed from easiest to impossible. The easier things are anything that would have little effect on your quality of life. The harder things would require major life changes. Then there’s the sacred expenses that cannot be altered. Put it all on the table and recognize that whatever you decide is okay. Below is my list with some of my expenses.
- Easiest: Starbucks, video games, new clothing
- Hard: gym, wine membership, eating out
- Sacred: housing, internet, health insurance, car insurance, retirement savings
Given my dream of changing into a new career I need to look at the big expenses. I do not drink enough coffee or buy enough clothing for changes in those expenses to meaningfully affect my budget. To make lasting impact on your budget target you really need to target recurring expenses. It’s much easier to cancel your wine membership once than to rely on your will-power to pass up every opportunity of Starbucks.
The real impact comes when you look at those sacred expenses. Can you lower them somehow? More specifically in my case, can I actually give up living alone? That leads us to the next question…
How do you get through the pain?
Let’s say you’ve decided to align your lifestyle and know what you will be targeting. It’s now time to take action. Here are the steps I suggest:
1) Determine your bare minimum. What do you absolutely need?
As I contemplate getting a roommate I know that at the very least I need my own bedroom and full access to the kitchen. Maybe you’ve decided to get rid of your leased car and are thinking of buying a used economy car with no frills. It could be that instead of getting Starbucks three times a week you will now limit it to those days when you only get six hours of sleep. Or you will set a limit on how often you go out with a friend who only wants to go to five star restaurants. You can set up guidelines on what an aligned lifestyle looks like for you.
2) Easy does it
Slow and steady will get you to your dream with less scrapes and bruises than forcing your way there. Take the time to think things through. Allow yourself time to make sure your decision is really aligned with your best interest. Don’t confuse a decision with a reaction to some outside stress, like getting a pink slip or reading about another person who launched their own business and is living in the Bahamas.
When we make changes before we are ready we are likely to slide back into old habits. Will-power is not an effective way to reach your dreams because it doesn’t last long. Moreover, big lifestyle changes take time. Even if I were to decide today that I do want to get a roommate it will take time to find the right-person. As Frank Sinatra said, only fools rush in.
Of course there is always initial discomfort whenever there are big changes. However, we can become accustomed to anything. Harvard Professor Daniel Gilbert states in his book “Stumbling on Happiness” that it only takes three months to become used to anything. You can see his 2004 Ted Talk here. In other words, give yourself plenty of time and grace as you become used to life without cable, steak, or a car of your own.
One last suggestion: remember that nothing is permanent. Say I do decide to get a roommate to save money. I may later on decide that the money is not worth the headache. At that point I can change again. And I can have the satisfaction of knowing that I truly tried to make it work.
Are you ready to align?
If you have a dream that requires you align your lifestyle with its pursuit then you’ll have to consider the following questions:
- Why are you changing?
- What will you be changing?
- How will you do it?
Above all remember why you are doing this. It also helps if you tap into a network of friends who believe in your dream. If you’re trying to cut down on how much you spend eating out, it’s okay to tell a friend you’d rather hang out with them at home and eat ramen. When those closest to you are supportive of your lifestyle changes it becomes much easier to adjust to the changes. When they are not supportive of your dream, it’s best to avoid the subject with them rather than sabotaging it. I had a friend who once said “Don’t tell your goals to trolls” because their doubt can seep into you.
For most of what I do my “Why” is that I want to make the most of my short time on earth. I began to seriously dream of becoming a personal financial planner after reading George Kinder’s book “The Seven Stages of Money Maturity”. There is one thought in particular that stood out to me:
Our first obligation in this world is to discover the circumstances in which our souls flourish. This is the truest and deepest meaning of freedom – living under the conditions that makes us most truly ourselves.
– George Kinder
I think this resonates with everyone. For some of us, our finances may not be aligned with our new direction. Thankfully with some effort you can change your lifestyle to reach your dreams.
Do you have a dream you’d like to save up for? Is there a “sacred” expense that you may consider addressing?