One of the most important steps towards reaching your goal Year Off Age is to cut spending. You need to live frugally to save the amount of money needed for a Year Off. And you need to do this for an extended period, often years.
I like to think of many things we spend money on as big “money wheels” that are easy to get trapped in. It’s basically a hamster wheel; you’re running and running (aka spending money and spending money) but you’re getting nowhere and not getting much in return. The key is to remove yourself from as many of those money wheels as possible. Get out of the Starbucks money wheel. Stop the cable TV money wheel. Avoid the expensive car and clothing money wheel. Cut spending on as many things as you can.
There are 3 key ideas you need to have an awareness of when you cut spending: delayed gratification, eliminate/reduce/find a cheaper alternative, avoid consumerism. These three principles should always be on the back of your mind when considering a purchase. We are constantly bombarded with marketing and advertising. You should know when people are trying to get into your bank accounts.
Now let’s discuss the three key ideas to cut spending in detail…..
1. Delayed gratification
Delayed gratification is the act of passing up an opportunity to get some satisfaction in the present moment with the idea of saving your resources for a greater opportunity for satisfaction in the future. It is the act of saying NO to a purchase now and saving the money instead. Delayed gratification is huge when it comes to preparing for your Year Off. Master the art of it. Get over your fear of missing out in the present and focus all your energy on your Year Off. It will be worth it, trust me!
What’s an example of delayed gratification? Passing up the opportunity to go out to eat and to the bars on a Friday night. The money you saved by forgoing this opportunity for immediate pleasure will be used in the future for fun during your Year Off. You can spend the money you saved on a big night out in Budapest while traveling around Europe!
2. Eliminate/reduce/find a cheaper alternative
Before buying anything, you need to ask yourself the following three questions:
- Can I eliminate this thing from my life?
- Can I reduce the amount I use of this thing?
- Is there a cheaper alternative to the thing I’m about to buy?
You should ask yourself these three questions and honestly answer them before every purchase you make. Before throwing something in your shopping cart or your Amazon cart, ask these three questions. Take the time to honestly think about them and answer them. This will help prevent impulse buys and help you think of creative ways to get what you want without paying full premium price for it.
Let’s look at the previous example about a night out to eat then out to the bars. Ask yourself the three questions….
Can I eliminate it from my life? It’s my friend’s birthday and I really don’t want to miss out on this night, so no I can’t eliminate it from my life.
Can I reduce the amount I use? Instead of eating a full dinner at the restaurant, I’ll just share a plate with my friend. I’ll limit myself to only 2 drinks at the bars. I will stay sober so I can drive home without having to spend the money on a Uber.
Can I find a cheaper alternative? I’ll just eat dinner at home before I go out and save the money that I would’ve spent on the dinner towards my Year Off. I’ll just meet everyone out at the bars later on.
Begin living a more minimalist lifestyle. You’ll save more money to finance your Year Off, and you’ll be more prepared for your Year Off when it arrives.
3. Avoid consumerism
This is avoiding the idea that spending money on things brings happiness. It’s the act of finding pleasure in life outside of the things that we buy. Avoid the marketing strategies of companies who are trying to sell you happiness through the product they are offering. Cut spending on things that give little value to your life. Practice delayed gratification. Know that you will be happier in the long run if you pass up the pleasure of buying something now for the pleasure of buying your Year Off in the future. Time to pursue your dreams is much more valuable to you in the long run than a new TV or Apple watch.
Once you’ve committed to your Year Off, these three things will be easier to adhere to.
You’re committed so you now have a tangible goal in mind. You have a focus, and that focus is your Year Off. It’s that free time to do whatever it is you want, completely free of the worries of normal adult life. No job to worry about. Few bills to pay. Amazing experiences. Awesome places to visit. New people to meet. That is your goal!!!
Start out with a goal of cutting your spending by $500 a year on your yearly expenses, $100 a month on your monthly expenses, $10 a week on your weekly expenses, and $1 a day on all your daily expenses. This all adds up to $2,585 that you will have saved after you cut spending for a year. A significant amount!
And once you make these first spending cuts, you will find it easier to make even more spending cuts and sacrifices. Think about how you can double the amount of money you save in each spending category. That would be over $5,000 saved per year!
Once you really have your spending under control, it’s time to start thinking about maximizing your earnings. Think about adding another $5,000 per year by working over time or by asking for a raise at work or by finding a side job. That’s an extra $10,000 per year you’ll have to pay off loans or finance your retirement fund or your Year Off fund, just by cutting your expenses and maximizing your earnings. Add that to the money you’re already able to save per year. Now you’re able to see the large chunks of money that you’re able to save to accomplish your Year Off goal.
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