In this down economy, tough times magnify poor and good choices alike. Lately, I’ve most noticed how well my husband and my mindset of investing, not spending has served to support us as we struggle to re-start our own business and live off our savings. It’s also made obvious how people who spend first and then invest, or never invest, have gotten into a lot of financial trouble once something big went wrong, most likely losing a job.
We’ve had no income for 10 months now, just counting out the months breaks me into a cold sweat, after my husband lost a job. But we’ve been able to continue our modest lifestyle and preserve most of our nest egg for our future business and kids college education. The only way we know how to do that is by investing first, and it’s something we’ve always done, whether the economy was good or bad, whether we were making $25,000 a year or $125,000 a year, whether we had one income, two incomes or no income (we’ve seen it all), whether we had kids or not (now we have 3 under the age of 7), whether we felt like it or not.
We made a conscious choice, when our first daughter was born, that we were going to live by what we had committed to, and not by what we wanted. What we committed to was simple and beautiful: to be married until death do us part and to provide a safe environment to raise our children. What we wanted was a long list of big and small things, experiences, and desires with seemingly no end – it would lead us to a complicated and stressful life with no big picture. Living by our commitments lead us to a modest, meaningful life full of sacrifice and delayed gratification and meaning; seeing the big picture was easy.
We have not, in our 10 year marriage, had a lot of the things we’ve wanted that money can buy. We don’t have in our budget any money for clothing, dining out, recreation, beauty, gifts or travel – what I call “spending”. Spending is exchanging money for extras, things, experiences and desires that don’t contribute to our family’s long-term well-being. Spending drains one of your main resources, money, with nothing to show for it.
We do have money in our budget for health (insurance, co-pays, prescriptions), groceries (the highest quality of food we can afford, organic is our goal but not always our reality), education (kids go to public school while it is a safe environment, but we anticipate as they get older that that will change), transportation (a safe vehicle for each of us, car maintenance, fuel, insurance), utilities, life insurance (a policy for each of us), retirement contribution, and household goods (the safest cleaners and detergents, energy efficient appliances, and earth friendly paper goods we can afford) – what I call “investing”. Investing is exchanging money for the long-term return of living a long, meaningful life during which we can do our part to make the world a better place. Investing gives you a return for your money – you can’t live long if you’re not healthy, you can’t be healthy if you don’t feed yourself well. You can’t contribute fully to your community and your world without an education – you get the idea.
Now, we haven’t always lived with this strict of a budget, just when we were low on income, which has been probably 6 of the 10 years of our marriage, including this year. But even in the 4 years we were financially more comfortable, our “spending” was very conscious and budgeted. Being entrepreneurs most of the 10 years has also reinforced that we never know what our income will be, so managing our spending and investing first fit naturally into our entrepreneurial mindset.
After 10 years of investing first, we’ve built up a healthy net worth and a pretty good tolerance for life’s rollercoaster – right now we’re zooming down an unexpected loop de loop. I am so proud that for all the pedicures and cute shoes I’ve foregone and the boat my husband’s never had we may not have spending bliss, but we have the freedom to invest yet again in our bigger picture.
