“Inspired by No Credit Needed: 33 Days And 33 Ways To Save Money And Reduce Debt : Sacrifice “

One of the key recommendations by all the personal finance people I’ve ever read about is;

“Live Below Your Means”

And for the rank and file of us that don’t have millionaire parents or grandparents, this means making sacrifices in how we live and spend. It would be wonderful to have enough money to do what you want, get what you want, and go where you want when you want to, but it just doesn’t happen for most of us.

So we have to decide what’s more important,.. the Present (vacations, entertainment, buying things to make life enjoyable) or the Future (have money for the kid’s college, retirement, etc). Each has good and bad points.

The Present - If you’re a ‘live for today’ person, this means buy now, worry later. There’s no way to go back and re-live your youth, so you should do everything you can to make it as extraordinary as possible. Experiences and temptations generally only come around once, and if you abstain, you might spend your waining years wondering why you didn’t take that extra trip, or see the Maldives, or, or,….

Americans are big (overall) on the immediate gratification notion. We want it big, exciting, and most importantly, NOW. The only problem, if you spend too much, or rack up too much debt, you’ll spend extra decades digging your way back out. And being a greeter at Wal-Mart isn’t all it’s cracked up to be.

The Future – If you’re the ’save for a rainy day’ person, you probably save and save and save some more. Putting off that trip so you can fully fund the kid’s college account, or paying into the Roth IRA. The present is to be sacrificed for a comfortable and well-funded future. But is it really the inconsequential things you’re missing?? The family trip put off another year. Holding off on pictures, yearbooks, class rings, or other once-only purchases throughout life. Sacrificing now to experience and live later is one thing, but how much do you put off now that you’ll regret later??

Living below one’s means should still include the “Living” part. It’s the juggling act of sacrificing the little, truly inconsequential things (Netflix/Cable, Starbucks, extra Pizzas, etc) and still include the consequential things (family). Little ones grow up, couples get older and health suffers. Planning for an active retirement doesn’t necessarily mean you will be ABLE to be active during retirement.

Sacrifice is a necessary ingredient for a responsible lifestyle, but too much sacrifice is more harmful than good.

Ways to Sacrifice

While that idea rattles around, here’s a few tips I use to figure out what to sacrifice and what not to;

• Is it Once-In-A-Lifetime? – Is what you’re giving up only going to be around for a short period of time, or worse, never again?? Family events with kids fall into this category, as do; Family photos, School events, Awards ceremonies, or pretty much anything dealing with the kids growing up. Once they’re grown, they’re gone. Don’t miss out.
• Can you do without it? – Anything not fitting in the Once in a Lifetime category gets the Five Day Test. Decide on what you want, then put it off for at least five days. Then reassess whether you actually need it or not. Many times something that sounds great immediately, doesn’t seem so great or urgent after a few days.
• Is it an Investment? - I’m not talking about stocks and bonds here necessarily, but anything that will save more money, or increase something else in value. Home repairs fall into this category. Fixing something is good, but if buying the next-quality-up replacement while doing the repair/replacement will increase the overall value of the home, or save money later on, then it probably is worth it to go ahead and spend the extra money.
• Would you really miss it? - Many people say they can’t give up such and such, but they’ve never really tried living without it. Think about whether you would really miss some of the things you just ‘have’ to have. Try it out; Many memberships allow you to put them on hiatus for a month or two without any cost. Call up the gym, cable company, or whatever company, and tell them you’re going out of the country for a couple of months and would like to suspend the membership. See what life’s like without it, and if it truly doesn’t have as much of an impact as you thought, go cancel it permanently.

Sacrifice doesn’t have to mean lowering your quality of life so much that you’re miserable, it just means getting rid of the marginal expenses that we let linger every day. The whole reason for sacrifice in the first place is to make it a better life. Don’t lose sight of that goal.