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By the author of the FREE online course Growing Self-Sufficiency: The Whole Picture
The Frugalite readers who know me well know that I’m generally a pretty positive person. So, I share my worst financial mistake ever with the intention that my error might actually do something positive if it is able to help someone else in some way. I recently gave it some thought and decided that the worst financial mistake was not living further below my means from the time that I was younger. If I had done that and continually added to a substantial emergency fund, this could have helped me enormously during some difficult times in my life.
I had a good start, but…
As a child, I was hard-working and frugal. I did numerous chores in our home and received a modest allowance. From the time I was 12 years old for a number of years, I had a wide-ranging paper route seven days a week. I saved every cent that I earned in a bank account that was actually earning me a pretty good interest rate back then around 40 years ago. I remember proudly paying for my own field trips with my money. However, I remember when I decided to splurge and spend my hard-earned savings on some trendy clothing that I did not have.
I had no example to follow
At the time that I decided to spend it all on clothing, I do not recall any conversation with my parents about this. Sure, I was, like 14 years old and this was my own money. However, this would have been a learning opportunity for me about always keeping some money in an emergency fund, and to be careful how I spent even my “fun” money.
My parents didn’t really talk to me about money. It seemed like it was a taboo topic, somehow. I wasn’t learning about it in school, either. So, in my formative years, there was a sort of vacuum in terms of how to deal with money. I seemed to pick up messages from society at large, which were more like, “Make money! Spend money! Don’t worry, you can use your credit card if you get into trouble.”
Saving in Hard Times
As I was a student for many years, I had many lean times. However, I do think I could have saved a small amount each week, like even $5. I just got into a mindset of simply trying to survive, without any kind of financial plan or vision. If I had an understanding that everyone, even a twenty-year-old, should have some money set aside, I would have done things differently.
For example, through some hard work, I did save up several thousand dollars when I was around 30. So what did I decide to do? Why, take a trip around the world, of course! It was the trip of a lifetime, with stopovers in Europe, Africa, India, and China. However, because I spent all my savings on my trip, I ended up returning to a very stressful time in graduate school, with no safety net of some savings beneath me. While I loved my trip, and I wouldn’t change it, especially visiting my good friends in Namibia and China, in retrospect, it would have been better to shave off a couple thousand from the budget for my rainy day fund.
Saving in Good Times
I have had time after finishing school with a good job and decent earnings. However, I did not put more away. I continued to live too close to my income. At one time in a large city, I was earning big and spending big: A lot of eating out and a fancy apartment. If I had had a vision for my financial security and future and had saved more of those earnings at that time, it sure would have come in handy. I can see now that it limited my choices. I wanted to move out of the city, and I wasn’t sure how to do it. Having some savings would have given me options then.
What is the Impact?
If I look back to myself at age 20, I was out of the house, studying full time and working a great job in the summer. If I had started saving for a rainy day with just $CA5 per week (that’s $CA20 a month, folks!), I would now have almost $CA9,000, which is just over $US6,500. I consider that a great emergency fund.
You can be sure I do things differently now! I learned my lesson and now live well below my means. This has meant that I don’t struggle to save every month. I make it a priority and choose what I buy carefully.
How do I do it? I am happy with what I have. Whatever I need, I can usually thrift it. One of the biggest money drains in my adult life was paying rent. In this article, I offer some ideas on how to pay less for that.
If, like me, you are facing a tight budget, here are some tips on how to start building an emergency fund. A worthy goal would be to aim for one month of your expenses and then gradually expand that to three months, which would be a real cushion in times of need.
If you don’t already have an emergency fund and would like to read some examples of how it can come in handy, here’s a great article by Daisy on just that very topic.
No Regrets, Just Lessons Learned
These days, it is harder than ever to save, but perhaps more important than ever. Do you live below your means? If yes, how do you do it? Has it allowed you to build an emergency fund? Please tell us in the comments below.
Colette is passionate about sharing her knowledge of thrifty living and self-sufficiency. She has developed her skills in self-reliance living in the suburbs, the city, and more recently, on her own Half-Acre Homestead. Colette lived five years completely off-grid and without running water in an eight by 24 foot tiny home while designing and building her own 18 by 24-foot eco-cabin. Her website, Half Acre Homestead is attracting followers from around the world who want to become more self-sufficient. Colette invites you to stop by the Homestead and check out all of the great resources including the practical How To Guides, A Tiny Home Resource Center and her organic gardening stories on her blog. She shares her wholistic model (body/mind/spirit) for achieving self-sufficiency in her Free Course, “Growing Self-Sufficiency: The Whole Picture.” Stop by the Homestead today to register free of charge!