I don't like the notion of a yearly salary. And I don't like the notion of constant pressure to increase this salary. This is just my personal feeling - there is nothing wrong with earning a yearly salary of say 40k and I have nothing against anybody (which is the majority of people) for doing so. Its just that has never, and will never, suit my lifestyle. As an entrepreneur, I guess I'm lucky enough to explore a different way to approach "income".
I made the mistake of picking up a one of those business magazines. You know, the one thats all about average salaries, savings tips and "How to get a promotion" type magazine. Definitely not my cup of tea. It got me thinking about my income and how I plan to manage my lifestyle over the coming years. Probably the most important part of my strategy is this:
Income is relative.
Relative to what, you may ask? Well take this scenario:
Say, I was living in Thailand - many fellow entrepreneurs I know are currently based in Thailand. I spent a little while there as well and managed to get a taste of the cost of living. For a single guy like me, who doesn't mind living out of a backpack, I can spend a month in Thailand or a similar country in SEA and spend around $1500. Thats enough for accommodation, food, (beer) and even enough to buy new clothes each month. That means, a year in Thailand would set you back around 18k. Thats below the average salary of most western nations.
Lets jump back to the present - currently I aim to earn around $2,000 a month. This is my target monthly income. If I was to continue earning this income while living in the situation I outlined above, I would have 6k left over at the end of each year. I don't know many people back home who get a 6k bonus at Christmas or even manage to put that aside in a savings account.
Now obviously I'm single, without a family and many other expenses. I'm still young and don't mind living out of a backpack. So I'm not saying, "you're doing it wrong". All I'm saying, is that through some creative "living", the difference between a $24k or a $26k salary doesn't need to be as big of a deal as we're constantly told it is.
Obviously aiming for just $2000 a month, is a completely different attitude to how most people think about income. It may not be the best way (I think it is, but thats just me), but its a different way. And thats whats important. Having different options and ways to approach life.
The Important Points
- Figure Out How Much Money you Actually Need - if you don't know how much money you really need to live a good, and happy lifestyle, your expenses will grow to match your income. For many people, it will be less than what you earn.
- Just Because Everybody else is doing it.... - When it comes to finance, I don't think we're all that good at it. To be honest, either am I. For example, we buy a car because everybody else does. Yet, if we were to use some common sense, leasing a car, something which barely anybody does, is the best option from a savings perspective. We're constantly being told to buy this and save that. Unfortunately we don't ask "why".
Just like in Mary Schmich's essay "Wear Sunscreen", where she tells the youth not to read beauty magazines as "they will only make you feel ugly". Maybe we should stop reading the financial magazines as they will only make us feel poor.