Belt Tightening

save money Jul 15, 2022

Under normal circumstances, I am not one to recommend people reducing their expenditure lightly (well, not expenditure that they actually want or need anyway). You see, I want people to have a great lifestyle. Having nearly died, I have seen how important it can be to live for the here and now because you don’t know how many tomorrows you will have.

As such, I would usually recommend that if people want to begin saving, investing or paying off debt, the best thing to do is to try and increase your income. There are a load of reasons for this, not least that you can increase your income potentially by a huge amount, whereas your expenditure can only be cut to a certain level.

This is my advice ‘under normal circumstances’. These are not normal circumstances.


Belt Tightening

During times like these, we may have to accept that some belt tightening will need to occur. I know it can be tough, but desperate times call for desperate measures. I have seen stories recently of people who are struggling to pay their utility or food bills, or who are even finding it hard making the mortgage payment each month, but who still have a big cable TV package and a ton of streaming subscriptions.

You see, us millennials have had it pretty good on the whole when you put things into a historical context.

Yes, yes, I know we lived through the financial crisis and now we have a cost-of-living crisis to contend with and things can feel pretty tough, but contrast that with the experience of people just a generation or two ago who lived through the world wars and had ration books to tell them what they could have to eat that week.

The problem we have is that for many Millennials, this will be their first experience of significant inflation and cost-of-living pressures. If you speak to people in the Boomer generation, they will recall times when interest rates were upwards of 15% and inflation was running at over 20%.

When you ask them how they coped with it, they will simply tell you that they ‘tightened their belts a little’. Although I am not a fan of this advice, the time may have come for us all to realise that we just need to cut back a bit. See this post for advice on how to do just that.


Essential vs Non-Essential 

Perhaps we do need to live without that Netflix subscription for the next few months, perhaps we could survive on ‘just’ the basic cable TV package (or even, shock horror, no cable TV package at all!). Perhaps we could make do without that coffee on the way into the office. You get the idea!

There are many things which I have heard described as ‘essential’ by people who are struggling financially when, let’s be honest, they really aren’t.

I don’t like it any more than you do, but, during times like these, we may need to just accept that we will have a lower standard of living and we will have to do without a few luxuries for a while.


This Too Shall Pass

The thing I like to remember during times like these is that ‘this storm too will pass’. The world has been through this kind of crisis before and come out the other side. What’s more, some of the best opportunities for growth and money-making often come just as we start to recover from a crisis. For those people who have their eyes open there could be some wonderful opportunities just around the corner. 

You may also want to consider cutting back on expenses to boost your investment portfolio, even if you are lucky enough not to be struggling with the cost of living at the moment.

The stock market is ‘on sale’ right now (that is, it has fallen by a reasonable amount and so you can buy stocks at a lower price than previously). That means that any money you are able to add to your investment portfolio will have more potential for growth in the future.

In short, it pays to keep a level head, be realistic about what is and isn’t actually ‘essential’ and try to make the best out of a bad situation. These kinds of economic situation often resolve themselves faster than we think they will and before you know it, things will be looking up.

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