3087: [Part 2] Earn Like A Boss Spend Like An Intern by Chris of Keep Thrifty on Money Goals

[00:00:00] This is Optimal Finance Daily, Earn Like A Boss Spend Like An Intern, Part 2 by Chris of Keepthrifty.com I had an 8-month internship during my time in college and it was a great experience. Beyond all the benefits of building my career, one of the best things that came out of it was the financial environment.

[00:00:21] I was making pretty good money, better than any hourly job I'd had in high school or over summer break. But even though the money was coming in, I was still living on campus in the same environment I'd been in while I was getting my degree. I hung out with the same friends, did the same activities and lived roughly the same lifestyle. By spending like I was still a student, I ended up padding my bank accounts quite a bit during those 8 months.

[00:00:48] It didn't really hit me until years later what the important lesson was here, but it's an eye-opener. Number 1. Your spending can and should be independent of your income. It's that simple. The fact that someone makes $100,000 doesn't mean they need to spend like they make $100,000. Some people in this situation spend like they make $200,000. Others spend like they make $50,000.

[00:01:15] Either way, there's a lot more choice in spending than what most people think about. Here's another light bulb. When you get a 10% raise or 5% or 3% for that matter, you don't have to increase your spending to go with it. It's tempting to look at increases in our income as an opportunity to reward ourselves for a job well done.

[00:01:37] But what's a better reward? Blowing your raise on an overpriced new car with higher insurance costs or using that money to secure your financial future? I know it may sound boring, but future you would be delighted if your raise went toward paying off your mortgage or buying months or years of freedom. So how do you keep to the mentality of spending like an intern even when your paychecks grow?

[00:02:03] Number 2. Remember that you can have fun no matter your lifestyle. Look back at the times in your life that you were the happiest. Most likely, the reason you were happy wasn't because of some infinite pile of cash at your disposal. No, most likely your happiness came from a different kind of abundance, relationships, purpose, or adventure. If you can find joy and fulfillment in life without incessantly swiping the credit card, then why wouldn't you go that route?

[00:02:32] Rather than investing in stuff, try investing in your friendships, family, skills, knowledge, and experiences. But won't you feel deprived if you're not buying all the shiny new toys? Number 3. It's not about depriving. It's about prioritizing. Remember that it's not deprivation if you're prioritizing something better. If you've got dreams for a life that's got more freedom, more travel, and less stress,

[00:02:59] then choosing to spend less now is putting what's most important to you at the top of your list. Take the time to think about where you want your money to go. Do you want to buy new furniture every 12 months to keep up with the latest styles? Or do you want to travel the world? Do you want the convenience of not having to cook? Or do you want to eliminate that last bit of debt? Do you want to spend on short-term conveniences? Or do you want to invest long-term in your values? Your answers might be different from mine.

[00:03:28] But until you take the time to think about these questions and ask yourself what your values are, you can't know whether your money is going to the right place. A recommended book on prioritizing is The More of Less by Joshua Becker. So how can you make sure you're sticking to your values and your spending? Number four, track your spending. As the quote goes, that which gets measured gets managed, end quote.

[00:03:56] If you want to know whether your money is going towards your values, the best way is to track your spending. We've used Thrifty to track our spending for the last three years, and it's done wonders in our ability to measure and reduce our spending. We've found a ton of bad spending habits that we've been able to fix, saving us thousands of dollars a year. Plus, as a bonus, tracking our spending means we're not only able to grow our gap between our spending and earnings,

[00:04:23] we're able to measure it and see it improve over time. Putting it all together. So there you have it. Putting these two together should put you in the position to beat inflation both on the income side and on the spending side. If you can do that, you should be well on the path to early retirement. From there, you can refine and improve your approach on both sides to get there even faster.

[00:04:51] You just listened to part two of the post titled, Earn Like a Boss, Spend Like an Intern, by Chris of Keepthrifty.com. I love this statement so much. I'm going to say it a little bit louder for the people in the back. Your spending can and should be independent of your income. I would actually cross-stitch that onto a pillow. I like it that much.

[00:05:16] And I thought the advice here on finding ways to have fun without spending extravagantly was great. I found that spending less actually helped me tap into a level of creativity and resourcefulness that I didn't even know I had. I'll give you an example. My Achilles heel when it came to spending was going out. I loved going out for happy hour after work, eating out, and spending my evenings gallivanting around New York City mindlessly swiping my credit card.

[00:05:46] I spent a ridiculous amount of money this way. So naturally, when I was reducing my expenses, I needed to figure out how I could change these spending behaviors without ruining all my fun. My solution? I made my apartment more fun than a bar. I would host these elaborate themed dinner parties and invent games and figure out really fun ways to get people to hang out with me at home.

[00:06:11] One of the games I came up with was called Suggestions. I would write out really weird suggestions for people to act out during dinner and then watch the group devolve into mayhem. So for example, one suggestion would be to repeatedly complain that the ceiling was too low. And I had very high ceilings, by the way. Or to keep asking people to speak louder because you can't hear them. Or to play footsie with the person sitting across from you.

[00:06:40] Like really weird suggestions. And I'm not sure I've ever laughed so hard in my life. But I am sure that self-imposed restriction is what opened up that level of creativity. And that's another episode of Optimal Finance Daily in the Books. Thank you for your support and for listening every day. I'll be back with more posts for you tomorrow, where your optimal life awaits.