Tag: thoughts

Why You Should Live Within Your Means

Why You Should Live Within Your Means

With more and more people today are focused on obtaining material objects instead of freedom. Think about how much time people are spending doing things they do not want to do in order to have things that they don’t need. In this article, we’ll explore why we think it makes sense to live within your means and a few tips on how to start.

What Does It Mean To Live Within Your Means?

Everyone has a slightly different definition of living your means. To us, it means to enjoy life as much as possible without sacrificing your long-term freedom. Let’s break that down a bit more to understand what long-term freedom is. Long-term freedom is the ability to do what you want while maintaining your quality of living. This could be retirement for some or working for others but either way, it is life without the necessity of a paycheck. To earn your long-term freedom, you want to be allocating your spare income toward saving and investing instead of material expenses.

How Do You Live Within Your Means?

Living within your means does not mean taking away all the fun in life. It simply means removing unnecessary expenses that do not provide a long-term benefit. As Seneca said, “Slavery resides under marble and gold.” Here are a few tips that can help you cut out unnecessary spending so that you can live within your means.

  • If you are making a significant purchase ask yourself “Why am I buying this?”. You want to make sure purchases are for the right reason. For example, are you buying that brand new Mercedes because you are an enthusiast that loves the brand or are you buying it because you think it enhances your image? Regardless of whether or not you can afford it, you want to be buying things for the right reason.
  • Living within your means isn’t only about money, it’s also about time. It’s great to have goals and push yourself but avoid work for the sake of working.
  • Sometimes a mindset shift is needed. If you find yourself having thoughts like “I’ll be happy once I have a beach house” it might be time for a mindset change. As Epictetus said, “Freedom isn’t secured by filling up on your heart’s desires but by removing your desire.”

Where Do I Start?

It’s important to understand that this isn’t easy or a switch that you can suddenly flip. With all the social media and marketing in the world, we are being conditioned to spend. Here are a few tips to help you change your mindset.

  • Realize that social media is a highlight reel. People are posting what they want you to see which can be quite different than their day to day life.
  • Examine your life and possessions, ask yourself “What is this really costing me?”, you might be surprised by some of the hidden costs.
  • Set your freedom goal. Figure out what freedom means to you and begin to build a plan around obtaining that. It is much easier to obtain something when you have a clear definition of what that something is.
  • Separate your personal value from the monetary value of the possessions that you own. That Rolex or Ferrari does not make you any different, there is nothing wrong with having nice things but do not chase them to patch your self-worth.
  • Understand this is a long-term goal and it will take conscious effort over many years to obtain and that’s okay. The fun is always in the journey, not the end result.

If there is only one thing to take away from this article – don’t work for possessions, work hard for freedom.

Warren Buffett’s Annual Letter (2017) Takeaways

Warren Buffett’s Annual Letter (2017) Takeaways

The Oracle of Omaha has recently shared his 2017 annual letter and just like recent years, it is filled with wisdom. Here are some of our favorite lines from his letter, you can read the entire letter on Berkshire Hathaway’s site found here.

Our Favorites From Buffett’s 2017 Annual Letter

  • “Don’t ask the barber whether you need a haircut.”
  • “It is insane to risk what you have and need in order to obtain what you don’t need”
  • “In America, equity investors have the wind at their back.”
  • “In the short run, the market is a voting machine, in the long run, however, it becomes a weighing machine.”
  • “Investing is an activity in which consumption today is foregone in an attempt to allow greater consumption at a later date. “Risk” is the probability that this objective won’t be attained.”
  • Kipling’s if –
    • If you can keep your head when all about you are losing theirs
    • If you can wait and not be tired by waiting
    • If you can think – and not make thought your aim
    • If you can trust yourself when all men doubt you
    • Yours is the Earth and everything that’s in it

Our Takeaways

Buffett’s letter always serves as a good reminder to come back to the underlying value despite all the market noise. It also helps us to stay grounded, with all the leverage and derivative products we find too many people are chasing things they don’t need. Lastly, it is important to have conviction in the positions we hold and understand our risk tolerance. If you enjoyed this, you might like Berkshire Hathaway Letters to Shareholders which is a compilation of Warren’s unedited annual letters.