I can't remember the last time I worried about money. We are lucky to be in a position where we don't have to ever be. It wasn't always that way but a focus on the things that work has got us there.
People have occasionally asked us how do we cover costs so easily (or at least it looks that way to them). Foremost we are consciously aware of where we stand at all times (income and expenses). There are also a few notes of the things we do that might set us apart from most. I’ve listed them here:
We rent by choice
I love renting. It’s all inclusive. There is one fixed cost per week, and that is the most you ever pay.
We’ve done the math and for our current situation and lifestyle needs, it's the best option. We feel no pressure to change that.
Yes, we could buy a house if we wanted to but don’t want to take on all the risk of insurance, maintenance, rates and bank interest that comes with it. Renting gives us the flexibility to live where we want in the manner we want.
We only have the one car
Because of the location of our house and proximity to amenities and work, walking is option number one. For longer distances it's a car (or even uber/taxi).
We don’t value owning cars plural and live a life not reliant on them.
We treat our finances like a business
Every month our aim is to make a profit. I make sure our expenses are below our income so that there is a buffer. We use that buffer to invest long term with an emergency fund covering the leaner months.
Our family runs at a 19% profit margin (with one income and two kids). That is – we have 19% of our revenue (income) left over after cost (expenses).
We know what our spending focus is
Freedom and relationships over luxury and convenience
We spend on quality for the things we love and cut back hard on the things we don’t appreciate
This summer we bought a $200 picnic rug. Yes, it's more expensive than most, but we use it every day, has an awesome pattern and the kids love using it. It brings us happiness.
On the flip side, my wife uses a three-year-old iPhone on a $25 a month plan. It does the job, but paying more for that combination doesn’t excite us.
We don't pay bank fees
ING accounts don't charge any atm fees from ANY of the machines you might use
Our one credit card is $0 a year as long as we pay it off each month.
Our one home loan is free (although we do pay interest on the loan)
We save for things before we need them
Every expense that we need to cover over the course of a year is broken into small monthly costs. Rent, insurance, Spotify, PO Box, Petrol etc. This avoids the need to use credit or debt.
We have six months worth of living expenses saved ready to go just in case as well.
We invest for the long term
The money we save by renting goes into shares and funds that set us up over time, providing income and growth.
We experiment with money
Each month we throw $100 on something new just to see if we’d like it or not.
It might be a new exercise program, cooking class, subscription box, essential oils or something a friend is doing that we may or may not like.
The key is that it’s an experiment. If we like it, it becomes a more regular part of our life. If not, at least we now know.
We set caps and stick to them
Each week we have an allowance for groceries and impulse buys (like coffees, drinks, eating out). We don’t let costs for these minor things get out of hand.
We realise we are different
We do things our way, you do things yours. Just because a friend bought a new car doesn't mean we suddenly need one. We can survive not going to Europe this year.
We keep things simple
We avoid debt (apart from a positively geared house we used to live in)
We don't need discounts for our utilities, just good rates.
We dont bother with rewards programs.
We live, work and shop local.
We holiday with the family.
We stay modest.