Why People Who Make Six Figures Still Struggle Financially?
4 Tips I learned from reading the book Love People Use Things about minimalism
Depending on the state you live in and the family size you have, most people who make six figures still struggle financially. Why is that and what can you do to avoid yourself from having the same issue.
Living a minimalist life is a life where you strive to serve a purpose and peace of mind instead of giving into materialism. For instance, filling your home with things you absolutely need only without so much clutter. Another example is when you have a few clothes in your closet without over cluttering your closet.
Living a minimalist life helped me to destress and save more money and have the freedom to enjoy the little things in life. For example, exercise when I want and see my loved ones whenever I want without stressing about making more money to sustain my luxurious lifestyle.
I also learned delayed gratification from being a minimalist and only think about what I absolutely need now versus what I want.
I decided to read this book to be aware of the consumerist society we live in today and what to do to avoid putting myself in a financial trap. People usually fall into the trap of buying and upgrading more items in their lives because of their higher-than-average income. This is a mindset problem, a money managing problem, not an income problem.
Investor Bill Mann once wrote: “There is no faster way to feel rich than to spend lots of money on really nice things. But the way to be rich is to spend money you have and to not spend money you don’t have. It’s really that simple.”
Doing well with money is about how you behave and it is hard to teach behavior even to really smart people. But, it doesn't mean it’s not doable. You can start any day as long as you have the right mindset.
The reason why people still struggle is that they want to keep up with society and the “rich” people around them. People often feel the pressure of buying the latest iPhone because everybody else has it and they don’t want to miss out on anything.
We tend to judge wealth with what we see. We don’t know for sure if the person has all the money in the world or they were able to get the expensive item with a credit card and now they’re in debt.
Others like to spend money on luxurious items and designer clothes to feel like they made it in life or to feel exclusive and wealthy. What they don’t realize is that these brands often advertise to middle-income people, not the top 1%. People with “new money” are the ones who generally fall for this trap and not people with generational wealth who know the value of money.
Now, this doesn’t mean that you shouldn’t indulge in these high-end clothes or lifestyles. Do it and buy whatever you can, just don’t put yourself into debt trying to impress people who don’t actually care about you.
Here is what you can do to take control of your finances:
1- Don’t keep up with the Kardashians! Be a little frugal with your money.
One way to increase your savings is to raise your humility. Many people with decent incomes save very little. They let ego in their way because they think the higher they make the more expensive clothes they deserve.
But if you live modestly even when you’re making six figures, that’s when you’ll be able to save more and enjoy more free time in the future.
Warren buffet lives a very modest life. He has enough money to hire his own personal chiefs but instead, he eats at home according to his interviews.
2- Simplify Your Life.
Do this by eliminating so many choices from your life. For example, keep fewer clothes in your closets and donate the ones you don’t wear anymore. Clear your life so that you only have fewer decisions to make.
I made the decision to have a few shirts and jeans all in high quality and in neutral colors because I know I will be able to wear them anywhere. Remember, always shop for quality not for quantity.
Instead of buying a brand new car, buy a used well-maintained car so that you will be able to use it in the long run without having to lease a new car every two to three years.
3- Always appreciate what you have instead of crying over what you don't have.
Practice gratitude and focus on the positive things in your life. A positive mindset will put you in a good mood throughout the whole day and it will help you become more productive. This will help you to not overspend on things you don’t need in your life.
4-Invest in experiences to make you happy not materials that will eventually make you go broke.
I practice minimalism because I want to spend more time and money on experiences with my loved ones instead of buying a designer purse. I personally value making memories over buying new materials and upgrading materials. Instead of buying the new iPhone that you think you need, why not save that money in a high yield savings account and spend the weekend away with your loved ones later on?
The key takeaway from this article is this: don’t live above your means and don’t try to keep up with your neighbors. Always be grateful for what you have. Next time you get a big promotion, try to downgrade your life to save the extra money you just received instead of upgrading. This will help you save more and invest your money in properties to make more passive income.
Thank you for reading!