First Person: Lower Expenses Can Be Better Than Higher Income

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I've read about people, heard stories about people, and even know people who make significantly more money than us, yet are in a much worse financial position. They carry hefty mortgages, are underwater on their homes, have significant credit card or student loan debt, or carry other financial burdens that we don't have. Such examples have taught me that it's often better to have lower expenses than a higher income. While it can of course be nice to have both, we don't; and therefore we focus on keeping our expenses low to recognize the following benefits.

Product Appreciation

No, by "product appreciation" I don't necessarily mean that the products we buy are increasing in value after we purchase them (although some of them might be). Instead, I'm referring to the appreciation we feel for the products we buy due to our lower income.

Take for instance, when we go out to dinner. Those with big incomes may be more likely to go out to eat more often, and therefore are more prone to taking such experiences for granted. Our family might only go out to eat once or twice a month though. In turn, not only is our anticipation and appreciation for such events heightened, but we end up with much lower costs (typically only about $60 a month) in this budget area than people with a much greater income.

More Informed Purchases

We find that when we are making less money, we spend a bit more time informing ourselves regarding the purchases we make. By searching online for the best deals, shopping resale, and buying store and generic brands in place of name brands, we minimize our costs and are able to stretch our reduced income. In these ways, we reduce things like our clothing budget for our family of four to about $300 annually, our food and entertainment budget to around $300 a month, and we find better deals when it comes to bigger-ticket purchases like appliances or vehicle/home maintenance costs.

Less Waste

It drives me crazy when I see waste. Whether it's food waste or tossing out old or unwanted furnishings rather than reselling them or passing them along to friends and family as hand-me-downs, consumer waste just really bothers me.

However, I've noticed that when income is at a premium, we tend to be more aware of waste. As I track many things in our family's personal finances, I also gauge our food waste. We manage to limit this waste to under 1 percent of our total annual food budget by doing things like using shopping lists, taking the family along to the grocery store to provide input on the products they'd like to consume, buying in bulk only when we know we'll consume the product or if it has a long shelf-life, and making weekly meal plans to ensure that we utilize what we've purchased.

We also do things like Dumpster dive for home furnishings. While it might sound somewhat low brow, we have found some great items set out in the neighborhood trash. From desks and chairs, to tools and tables, we've managed to furnish portions of our home with perfectly acceptable pieces that only need a little cleaning or tender loving care and repair.

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The author is not a licensed financial professional. This article is for informational purposes only and does not constitute advice of any kind. Any action taken by the reader due to the information provided in this article is solely at the reader's discretion.


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