Wednesday, October 24, 2012

My 50% Goal

The word goal immediately indicates that this is a concept I am working toward though not yet accomplished.  If one has already arrived why would one need to set a goal. 

Years ago after living extremely frugally for years it was time to seek employment. In the process I was offered not just one job but two.  The first was part time which I immediately began and a couple months later I was offered a full time position. Since the hours did not conflict I was able to keep them both. 

I found myself in a different situation than I was familiar with.  I was making far more money than I actually needed to maintain my lifestyle.  I needed half of what I made to fulfill my basic living expenses.  I admit that I went wild and spent more extravagantly than would have been prudent rather than saving.  Despite that I learned a very valuable lesson. 

Living under my means was a freedom that I had not yet experienced in my previous 20 years of adulthood.  And it was great fun.  I could go where I wanted, do what I wanted, and even though the amount I made was what many might consider a minimum wage I felt rich.  My bills were few, all I owned was paid for (with the exception of a small mortgage), and I could hang on to my paychecks for weeks before having to cash them.

The lesson I learned and took away from the experience was to always set my goal as living at 50% of my income.  This takes the focus from how much we make to how much we spend.  Ones first thought might be that this would be impossible on their current income. Just to make it more interesting I will share that at the time I set the goal I was making roughly $9.00 per hour on my full time job and $7 something on the part time job.  Not what most would consider as racking in the bucks. 

My 50% had a number of reasons first of all being the knowledge that no one is guaranteed a job.  Yes, that would come as a shock to some and a rude awakening to others who went through the economic impact in 2009 and are still waiting.  Second, I realized that if I was laid off the typical unemployment rate is half of what one might have made on the job.  Third, other factors such as health, desire to home school ones kids, or seasonal employment could come up.  Having lived in an economically challenged community for many years I fully realized that having a job was indeed a blessing but not one to be counted on.

Over the years I have had to manage, change, and adjust many times always mindful that a contract is the enemy of flexibility.  More than once just when the goal has been achieved something or someone happens that throws me off track so back to the spreadsheets I have to go.  In the old days it was pencil and paper but now mostly excel with which a quick click of some buttons I can see the annual impact of a change.  Often my major financial planning is done on the back of a receipt while riding the bus.

Financial planning is often like hitting a moving target and maybe that is exactly what is supposed to be in this drama we call LIFE.  If we approach it any other way maybe we are merely fooling ourselves.


Practical Parsimony said...

I have a friend who was poor but content and had enough. Her husband died at 36 and she went to school at 32, studied to be a nurse, graduated, and lived well below her means. She used one check and saved five checks. She still lived in a trailer, bought few clothes, but ate out often with friends. She was unchanged by her new-found salary.

Carol Schultz said...

Sounds like a very interesting lady of many talents. Thanks for sharing her story. It sounds quite courageous.