Recently I heard a financial saying that was new to me online: you can’t out-earn bad spending habits. This is such a true statement. No matter how high your income is, if you don’t have financial discipline and try to live frugally, you can easily inflate your lifestyle to the point where you’re living paycheck to paycheck.
After all, many lottery winners end up in bankruptcy just a few years after collecting their winnings. But practicing financial discipline and sticking to a strict budget may not always be enough to achieve your financial goals. Here’s why.
I Couldn’t Afford a Home in Boston
Back when I lived in my cramped one-bedroom apartment in Greater Boston, I dreamed of owning a house. I desperately wanted to get on the property ladder so I could start building equity. But I didn’t earn enough to afford a home in the area I lived in while meeting my other financial goals like retiring early.
I couldn’t find any homes that were located in a safe area and good condition for under $600,000. After factoring in the mortgage payment, property taxes, and expected maintenance costs, buying a property that expensive would’ve left me house poor. It would’ve been hard to save for a regular retirement at age 65 while juggling housing costs that high, let alone an early one.
Cutting Out Luxuries Wasn’t Enough
A lot of the personal finance advice online focuses on how to increase your financial discipline, which is definitely something we all need more of. Studies have shown that we tend to think we’re more financially disciplined than we actually are. Most of us have unnecessary things in our budget that we could cut out, like that second streaming service or monthly manicure.
But sticking to a strict budget and cutting out luxuries wasn’t enough to put me in a position to afford a house. I simply didn’t make enough money to compete in the Boston housing market. Some financial goals are too big to achieve through financial discipline alone. I needed to make bigger money moves and lifestyle changes to be able to get on the property ladder.
I eventually became a homeowner last year by increasing my income to save up more money for a down payment and moving to a different state with lower home prices. My whole family lives in Boston, so it was hard to relocate to Michigan and leave them behind. But since I can take my remote job as a freelance writer with me anywhere, it just didn’t make sense to stay in a high cost of living area.
It’s much easier to achieve my financial goals in the inexpensive rural area I currently live in. Now that I don’t have a $2,000 rent payment, my financial discipline goes further. In Boston, I often felt like I was just treading water, but here I’m able to pay down my mortgage and save a lot more for retirement. I’m more motivated because it feels like my hard work and careful money management are paying off.
Get Creative to Achieve Your Financial Goals
If you’ve already trimmed your budget as much as you can but you’re still not close to achieving your financial goals, you may have to get creative. I thought about converting a van to reduce my housing expenses so I could save up more money for a down payment. Many people move in with their parents or pick up several side jobs to pay off debt or save for a house. You could ask your boss for a raise or job hop for higher pay.
Don’t get me wrong, you’ll still have to practice financial discipline to achieve your goals. Even if you find ways to raise your income, you’ll have to keep unnecessary purchases to a minimum to hit your savings target. But getting a bigger financial shovel by increasing your income or drastically reducing your expenses makes the whole process of reaching your goal faster and easier.
Has financial discipline and careful budgeting been enough to reach your financial goals? Or have you had to make bigger money moves and lifestyle changes to get there? Let me know in the comments section below!
Vicky Monroe is a freelance personal finance and lifestyle writer. When she’s not busy writing about her favorite money saving hacks or tinkering with her budget spreadsheets, she likes to travel, garden, and cook healthy vegetarian meals.