Emulate Someone Who Earns Less Than You: Strange Ways to Save Money

No matter how little money you earn, there is almost always someone, somewhere (likely in your own area), who is managing to live well on less than what you make.

Now, by living “well” I don’t necessarily mean having a three thousand square foot house, a Mercedes, a cruise every year, and a housekeeper. I’m speaking more in terms of having basic needs met such as shelter, food, utilities and maybe a couple of extras. They’re in no danger and they might even be happy with their lot.

The point is that people manage to live well at almost all income ranges. I’m related to some people who manage to live pretty well on ten thousand dollars a year. They grow their own food, use almost every frugal trick in the book, live in a small house that is paid for, and live in a low cost of living area. They might not own a lot of stuff, but they are pretty happy. They made the choice to live on this tiny income so they wouldn’t have to work as much and would be free to pursue other interests. Yet they aren’t poverty stricken in any way, despite earnings that are below poverty level. How is this possible?

If you want to save money you need to live on less than you earn. That’s a pretty solid fact of personal finance. Where it becomes a problem is when people start with the, “But I can’t,” excuses. Many people think that it’s just not possible to live on less than they earn. They look at all their bills and the fact that every penny goes out every month and they say, “I just can’t.” Trust me. You can. People all around you are doing it.

Let’s say you make fifty-thousand dollars a year and you can’t manage to save anything. Yet there are people in your neighborhood with the same number of kids or the same sized house who manage to do pretty well on less than that. How is that possible? Look closer at their lifestyle. Are they driving the newest cars? (Probably not.) Do they have a garden out back? Do the kids wear hand me down clothes? Do they have the premium cable package and a TV in every room? Do they have lavish Christmas celebrations with heaps of presents? Does the family shop at thrift stores? None of these things are necessarily obvious at first glance. Unless you know these people well enough to be privy to their choices, you think (or assume) that they’re just like you, maxed out to the hilt.

But then you learn the truth at a party or through some good old neighborhood gossip. They’re making less than you! When you see your neighbors out and about, you may say to yourself, “I know the husband isn’t making more than forty-thousand and the wife is a stay at home mom. So how come they got to go to the Grand Canyon last summer and we had to stay home when we’re making so much more?” Upon closer inspection, however, you’ll likely see that they are cutting their living expenses in ways that you are not.

We are a prime example of this. If you look at our income, we shouldn’t live in the neighborhood that we do, we shouldn’t travel as much as we do, and we shouldn’t have many of the non-necessities that we do. We make probably half of what many of our neighbors bring in. However, we live very frugally in other ways so that we can free up money for things like travel, retirement savings, and a good neighborhood that are important to us. Our choices aren’t immediately obvious because clothes bought at a thrift store look just like those bought anywhere else and you wouldn’t know that the vegetables I brought to your party were grown in my own yard instead of bought at the supermarket. The differences between my neighbors and myself are subtle but significant.

When you complain that you can’t possibly live on less than you earn, remember that there are plenty of people in the world who are making it on a fraction of what you’re earning. They may have had to make some sacrifices to do it. Maybe they moved to a lower cost of living area, or they forego all meals out. Maybe they traded down in house size. Whatever they did or are doing, you can do it, too. You don’t have to, of course. If you’re not prepared to make the changes you’re free to keep on spending at or above your income. But if you want to save some money, you’re going to have to find someone who is doing well on less than what you earn and emulate them.

You don’t have to go straight to poverty-level to try this. Just cut back. If you make eighty-thousand, try living on seventy-thousand. That would free up ten-thousand dollars a year for savings and you would likely still be doing quite well. Probably quite a few people in your immediate area make that much and do very well for themselves. If you make forty-thousand, try to get by on thirty. Your choices will likely be harder than the first person, but it’s possible. Heck, your next door neighbor might live on that and he’s the one who just got back from a cruise to Jamaica. Instead of dismissing it as impossible, have a talk with the person. Find out what they’re doing that you aren’t. Most people are willing to share their frugal tips with others.

The idea of emulating someone who makes less than you is foreign and strange to many people. Most people go the wrong way and try to emulate people who make (or spend) more than they do. There’s nothing wrong with aspiration, but emulating those who make more money just leads you into trouble. Emulating someone who makes less than you can be surprisingly rewarding, both financially and personally. You learn more about what you really need to get by and you get better at prioritizing your wants. Most importantly, you save money.

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5 Responses to Emulate Someone Who Earns Less Than You: Strange Ways to Save Money

  1. patientsaver says:

    Nice story.

    You can’t really downsize from an $80,000 a year lifestyle to a $70,000 a year lifestyle unless you track all your expenses. If you try to cut back on expenses without really understanding how it’s affecting your bottom line, then you’ll soon lose motivation and feel like it’s pointless.

    Carefully tracking your monthly income from all sources, ans well as every dollar spent, requires some effort at first but soon becomes an effortless habit that reveals quite a few things about your personal spending habits, weaknesses and tendencies.

    If you plan to live on $10,000 less a year, come up with an automatic way of banking that $833 a month.

  2. Kate says:

    My husband always believes that if only someone would die, all of his (and my) finances would be fine. I always try to find ways to show him that what we have, sorry to put it this way, “ain’t that bad.” I think in order for him to see this, I will emulate someone who does earn less, save up the money, and show him that we have plenty to live happy on. I think tracking our income IS a great way to start. I do not think we can bank $833, but I think we can try for $400 and go from there!

  3. Gail says:

    The more you make, the more you pay in taxes as well so having a smaller income can with frugal living equal more income than earning $10K more. I’m always surprised by the people that insist they can’t live without cable, cell phones, daily activities for the kids (all that cost money) etc. If push came to shove you would find out that you can live without all that. My son (who has cable) tapes the show Downsized and comes over and watches it with me. Although this is supposedly a family that is trying to make do on less, they don’t seem to use much common sense at all with their finances. I think that is one of the basic problems with folks that ‘can’t’ live on their income, is the don’t use common sense. If they are making $50 less each month than their expenses, then they need to chop out $50 of expenses whether they think they can live without the item or not.

    Watching your neighbors, I doubt, is that good of a way to think about your finances. It isn’t about them, it is about you and your family. Now if you know for sure that they are being frugal, then ask them for hints, but what you may see as frugal living is them getting $10K deeper in debt each year.

  4. Cindy says:

    I am a single mother with two kids at home, ages 13 and 15. I make 40K per year not including child support. I clip coupons, shop at thrift stores and clearance sales, and save every penny.
    I have managed to save over $8000 this year, which is in a savings account for when I need it. The best part is that I have designer clothes from the thrift shops that retail for over $200 that I paid under $10 for. I go to work looking like a million bucks and my co-workers think I may be over paid! My teenage kids have all kinds of nice things, also courtesy of the thrift stores, some of them brand new with the original tags on them. We have a very nice lifestyle with no debt due to the shopping habits I have. Everyone should try this.

  5. Tammy says:

    To really cut back and live on less, a plan needs to be formed. You need to know where money is going and what items can be cut back. If a family is use to having certain things like the best cable package available, steak dinners every night and vacations every year. A plan needs to be put in place that everyone can adhere to.

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