I recently posted this as a comment reply on another post but I thought it would be aptly found useful in this sub as well as in r/povertyfinance where I will also repost it.
I'm reading a book called the "Millionaire Next Door." The authors did research on American millionaires and wanted to find out who they were, what they looked like, how they made their wealth, and how they spent their money. They found that the average American millionaire is first generation affluent, received little if any help from poor family members, built their wealth through entrepreneurial blue-collar businesses, and are extremely frugal. The average American millionaire goes unnoticed because they, on average, live well below their means in low-middle class neighborhoods (with firefighters and teachers as demographic neighbors), drive used American-made automobiles, and hardly if ever spend money on new or designer items (they tend to buy secondhand clothing, and if they do buy a suit for example, about 49% never buy a suit that totals more than $300). I have spent a lot of time since losing my professional job and taking a 50% pay cut feeling woe-is-me and convincing myself that I was too poor to save more than $50/month. But the truth of the matter, is that I wasn't willing to make sacrifices. The average American, and I would even venture westerner to include western europeans, aren't willing to give up certain "luxury" spending habits.
I have become much more frugal than I used to be even 6 months ago. In 2016 I would spend $2.50 ea morning on a tall starbucks black coffee (no bells and whistles). When I got my first professional job after college I would save $500/mo and then easily spend $500/mo on eating out (that's not even including whatever I paid for groceries). I now eat entirely at home (I never eat out or even buy a beverage out, I have my own coffee maker and I carry a reusable water bottle with me everywhere). I went vegan in January so I no longer spend money on pricey meat and dairy products. I'm two weeks into my most extreme spending hack on groceries. I eat third world as much as possible. I no longer buy anything that comes in a bag, box, or can. I buy only bulk dry goods with reusable bags and fresh produce. If I want black beans, I have to soak them overnight and simmer them for 2-4 hours. But I also cut my monthly grocery bill from $240 to $160. I am eating all of my meals and snacks for under $5.85/day. You can't even do that at McDonald's. I am also one week into biking to work and will be also commuting by bike to most of my errands and appointments. I'm about to call my insurance company and attempt to negotiate my insurance rate down now that my commuting habits have changed. That'll snag me more savings if I'm fruitful in my attempt.
I currently make $1633/mo after taxes and I've gone from saving $0-$50 a month to at LEAST $350 which is right over 20% of my income. I'm constantly combatting spending aggressively and saving where I can to build savings faster. The average American saves less than 5% of their incomes, which is nothing should an emergency hit. They don't invest in stocks or bonds, few max out their 401k and roth IRA. People will look for any excuse to indulge in their instant gratification and borrow from their future selves. Are companies shitty and should they pay more? Abso-freaking-lutely! But that doesn't mean that we don't have some level of control over our own lives.
And before I come off as some pretentious person who doesn't know what it's like to be authentically poor and try to save, I have been and continue to be relatively poor. My family lost everything except the clothes on our backs and lived in hotels and on friends' couches during the great recession. My parents continue to be between jobs and homeless. They work jobs that provide food and housing because otherwise they couldn't work. They are in their 50s/60s and have no savings, no assets, no retirement funds. They own no home and no vehicle. I worry about them constantly, but they are also in that majority demographic of Americans who won't do what it takes to alter their consumption even if it results in only saving $50/mo.
As for me, I make $12.50/hour and my living expenses even with two roommates eats up 46% of my monthly income (I live in Aurora, a Denver suburb where the job market is good but the housing market is overheated). There is very little that I can afford. I have $17 of disposable income in my bank account right now, and $196 in savings until my check hits tomorrow and I can add $175 plus the $17 to savings. I don't go out, I don't get haircuts, I don't get to go to the dentist right now. But I do what I can to save because you never know when you'll be between jobs again or what will happen. You have to invest in your future self. I don't want to spend my entire life living hand to mouth.
Submitted July 18, 2018 at 12:53PM by Comrade_Soomie https://ift.tt/2uKG9KN
