One of the most recent audiobooks I completed was “Investing with Purpose” by Mark Aarsdma. Initially, I thought the book was going to teach me the fundamentals of investing, but what it actually did was drop little jewels of investing knowledge I needed to receive before I should even think about investing.

I decided this year would be the year I’d start investing, but, as with all things, I didn’t want to jump into it blindly. I needed to do my research, engulf myself in material, learn the lingo and theories, etc. I’m a planner. It’s rare that I just jump into anything. I think this model has kept me from making a lot of decisions I’d regret.

One piece of advice that will be the basis of this post is:

“One of the most powerful things you can do for your future is consume less in the present and invest more in the future… it makes the difference between a lifetime of treading water and a future of growing resources.”

America is a nation of consumerism. We have been conditioned to believe we need things – and many of them.

When I reflected on Aardsma’s advice, I noticed I was not putting myself in a position where investing was a possibility, because I was consuming more than my budget would allow for that.

The investing percentage you’ll see over and over if you just do a search for “investing for beginners” is the 70% rule.

70percent-rule1

So, as you can see from the image, 10% of your monthly income should be reserved for investing.

If you cannot afford to sacrifice 10% of your income to invest, no questions asked (this is what Robert Kiyosaki, infamoulsy known for authoring Rich Dad Poor Dad, calls “paying yourself first” – that, no matter what, you pay yourself – in the form of investing, saving, etc.before everyone else) you probably need to make some changes in your spending.

For instance, I realized I was paying too much in rent. I could afford it, but was it necessary? I was paying for the location. No doubt about it. Old Fourth Ward is my favorite neighborhood in Atlanta. It’s convenient to downtown, which is where I work, and has no shortage of things to do – from great eats and access to the Beltline to plentiful bike lanes access to the city in several routes, several parks and street parking. I was a resident of Old Fourth Ward for over three years. Ten years ago, Old Fourth Ward did not look the same. Gentrification has touched down in the neighborhood, with a swiftness! So much so, that rent prices have risen and will continue to rise. I couldn’t justify paying what I’d have to pay for the space I had. It was beyond ridiculous for me.

Making the decision to move out of Old Fourth Ward was not an easy one. But I needed to save more money, and reserve more cash so that I could invest without compromising responsibility. The place I found is far less expensive, though not as convenient as I’m used to in Old Fourth Ward, but still close enough to the city that my commute to work is less than 20 minutes.

Thinking further about Aardsma’s advice brought insight to my spending habits. I’m a serious budgeter. I have been since I was young. Before we went school shopping for the new year, my dad would tell us how much we’d have to spend. I would go through the sales papers and create a shopping list based on what I wanted and how much it would cost, plus tax. I’m telling you, I was serious!

So being a smart consumer was not a new concept to me. As we make more, however, we have been conditioned to think we should automatically spend more – because we deserve it. Well, I don’t think there’s anything wrong with rewarding yourself, but we actually need far less than we think.

Years ago, I had no fewer than 100 pairs of shoes. I needed a closet just for my shoes. I probably wore a good 30 of them in a regular rotation, though. That was excessive.

Before I moved to my new place I did a major haul of stuff. If I didn’t need it or use it, it had to go. And everything was fair game – clothes, shoes, kitchen items, books, furniture. It wasn’t easy. Some items I’d think “but I might need this when I…” Except I’d had said item for over a year and “when” never came, and likely never would.

I made a good amount of cash from the items I sold. And I put that money in an account to invest once I was ready. I still haven’t touched it.

I like nice things like the next person, but what Aardsma’s advice forced me to consider was the price of consuming things. Think about how much stuff we buy, just to look at, but want to complain when we don’t have the funds to enjoy ourselves. Home decor, televisions, gadgets, rugs, clothes in excess, shoes in excess. There’s no limit to STUFF. And, for what, to prove something to people? That we have such-n-such? Or, are things compensating for an insecurity? We need to have, to own, and create an emotional attachment to non-living things that (for the majority) don’t serve us.

This is probably going to be the least popular of all my posts among my friends, family, and followers. People like to justify why they need more, and get defensive when their spending habits are questioned.

I’m not here to pass judgment. Just to offer an alternative way of thinking. Even if you could spend just $20 less a month than you do now, you could start an investment account, or pay a little more than the minimum on your credit card.

When I make purchases now, I ask myself “Is this a need or a want?” “Is this purchase merely for consumption, or as an investment?” It has helped. I have a lot more funds left over after the bills are paid than I did before. I’m not living waiting on my next check, and continuing an awful cycle.

I don’t make a lot. Folks think I bring home a lot more than I actually do, because I spend wisely. The truth is, I had to be smarter about how I spend my money.

I also noticed how much better it feels to not have so much stuff. It’s good to de-clutter every now and then. And I was nowhere a hoarder – in fact, I think I have a purging problem. I purge something I don’t think I’ll need then wind up looking for it weeks later. *sigh*

I know many people that speak to the power of living with less. You might not notice how restricted you feel until you get rid of all the stuff. It truly is freeing. I challenge you to try it out!

Let me know how it goes. I’d love to hear back from you 🙂