Thoughts on Earning and Spending Money Habits
One's "Annual Salary" is an interesting thing. I used to think that how much money you made was the only thing that mattered. For example:
Someone in their late-twenties, perhaps having 5 years of work experience in their respective field, making over $100,000/year was considered "successful", someone who was making $60,000/year was "doing well", and someone who was making $30,000/year or less, was perhaps struggling or not working a career in a field that requires a specialized skill. I used to look down upon people who had "minimum wage jobs". I mean, I've done the math: minimum wage JUST went up to $10/hour, and let's say you were lucky enough to have a full-time job that offered you 40 hours a week (a lot of minimum wage jobs don't offer their employees a full 40 hours a week, but rather 30-35/week, so they don't have to pay for benefits). This is $400/week before taxes, which for this example's purpose, let's assume is 15%. That's $340/week take-home pay, and assuming the employee works 52 weeks a year, that's $17,680/year. It's not impossible to live on that salary, but nowadays, minimum wage is NOT a livable salary. Back when it was invented in the early-1900s, yes, it could be considered "livable". Not today. I don't like getting into politics, but you can gather at this point that my thoughts on raising the minimum wage to "$15/hour" in the next 5 years is not a good idea. It will just inflate the USD like CRAZY, an make a coffee $10 or a candy bar $5, and it enourages people to not seek higher up and better employment. I think that starting with a minimum wage job is a great thing, but it's not designed for you to work there your whole life! I have a great respect for people who start at the bottom of the ladder, and work their way up to higher management. I sometimes hear people say "But I don't want that much responsibility," well guess what? That's why you get paid the wage you do, because a minimum wage job has no prerequisite. ANYONE can apply for a minimum wage job as long as long as they're 16 years of age. Okay, now that that's been discussed...
Throughout 2016, I have discussed with friends and family the fact that it's not about how much you MAKE, it's about how much you SAVE. I never really thought about this before. For the sake of example, let's take someone like myself: a 26-year old individual who is single with no dependents. So, that person earning $75,000/year, but who SPENDS all of their money, is NOT in the same category as someone who earns $35,000/year, but who saves 60-75% of their money (an extreme example, but we can assume this person lives rent-free (with parents), as many of my friends do, and who is frugal and saves). This means the first person earning $75K and saves a few thousand a year, is not as financially responsible as the second person, who, earning less than half annually, saving $21-26K/year, has an ASTRONOMICALLY higher chance of success with investing their money and becoming a millionaire within their lifetime. I've been listening to an audio book called "The Millionaire Next Door, and this is exactly what it discusses: the types of people and their earnings vs. savings habits. I want to turn more into the second kind of person, working hard and earning a good income, but SAVING as much of it as possible. I don't need to live a lavish lifestyle, at least not now.
Thus, nowadays I'm less concerned about "hussling" and working as much as humanly possible, but rather saving more and making sure that my bank account continues to grow each week/month, and that I don't see all of my money go to food and entertainment. Don't get me wrong, I still like working a ton throughout the course of a week, but sometimes I look at my Monday-Sunday income, and I think, "I don't even see half of this money!" And it's not because it goes to bills, it's because of the nature of my job, I am hardly ever paid on time. I often don't even like calculating how much money I make in the course of a week until I SEE the money in my hand or it's in my bank account.
I am a sucker for going to Starbucks and spending lots of money on coffee and other overpriced products. I also don't cook at my apartment... ever. I've been to the grocery store probably twice in the last 6 months, and that was to buy medicine. I definitely want to change this, so I can start eating healthier, but also to save money. My 3 biggest categories of spending happen in the following, and I'll include my annual estimate for how much I spend on them:
$12,600 - rent & utilities (based on my current portion of the rent for my apartment + my portion of utilies)
$10,500 - food & coffee (Jan-Dec 2014 actual spending; yes, how awful is this?! Averages to a whopping $875/mo for ONE PERSON! I've done lots of research on this, and many of my friends who cook at home, or spend less or don't drink Starbucks at all, spend some $200-250/mo on food; it doesn't help that I'm constantly on-the-go, but that's still no excuse for spending a ton of money on food, and if I restricted my coffee intake, or just brewed it at home, I'd save a ton, too)
$7,000 - auto expenses (breaks down to some $4K on gas, $1.5K on insurance, $1K on oil changes/maintenance (since I drive so much), and $0.5K on bridge tolls, etc) - yes, I'm going to be clocking some 40,000 miles driven from July 2015-July 2016 for all of my gigs. IN-SANE.
Total: $30,100/year spent
This doesn't even include things like buying clothes throughout the year, my medication, seeing movies/shows, any traveling expenses, entertainment costs...! Thus, individuals who earn less than $30K a year could not live my lifestyle. I'm not sure if it's defined as "lavish" or exhorbitant, superfluous, or excessive (haha synonyms), but if I worked more LOCALLY, and made food at HOME, that would save at least $10K. The rent is somewhat unavoidable if one chooses to live in the Bay Area of California. I could live at home with my parents in Brentwood, but it's not my desired area--truly, the most ideal place for me to live in this industry is Berkeley, Oakland, or San Francisco (all three INSANELY expensive: a one-bedroom apartment is easily $3K/month, or $36K/year; even sharing a 2-bedroom apartment would cost you about $2K/month, or $24K/year). Alameda is nice, too. It's difficult, because I'd love to live in a house again like I did in Stockton, so that I could play piano at any hour of the day, but living with roommates--living with PEOPLE--is hard. I once lived with 5 other people in Stockton; it gets MESSY and things go unaccounted for, and people don't clean up. Not only that, but moving out of Stockton was INCREDIBLY hard--the house and yard was a compelte disaster, and I ended up hoarding a TON of stuff, so I wasn't at all living the "minimalistic lifestyle" like I truly desire.
Because, why live in exess? Why waste money, why own too many things, why go overboard? There is NOTHING wrong with saving money, investing it, and planning for the future. This is going to be my mindset going forward. I was telling a friend on the phone that really, all I want to have is the following:
🎹 2 weeks' worth of clothes, including some nice dress shirts, a suit, and 3 pairs of shoes (casual, running, and dress)
🎹 a few items of sentimental value
🎹 a journal and a few books
🎹 my electronic devices (cell phone, laptop, iMac, iPad, headphones, maybe a camera)
🎹 [and of course, bed linen, towels, toiletries, and kitchenware], but...
...That's IT! Even right now, I feel strange owning a beautiful 1918 Steinway Grand Piano that I don't even play. I feel awkward playing it in my apartment, because I've gotten "knocks from the ceiling" on the floor of my upper neighbor when I play, and that is incredibly uncomfortable to experience. Yet, I'll have the TV or YouTube blasting, and I don't get any complaints. There's just SOMETHING about the sound of a piano that drives ordinary people bonkers. Besides, it hasn't been tuned in the whole time I've been at the apartment, rending its sound reproachful and displeasing. I've enjoyed the time I've had it since November 2012, but I honestly might sell it. I really like my good ol' Yamaha P-120s Digital Keyboard that I obtained in August 2002, and that instrument does not need to be tuned (saving me money, lol), and I can wear headphones, and also use it to trasnscribe, notate, and compose music at my desk.
What would my life be like if I lived in a different country? One that has no tax, even? I assume I'd walk a lot more, make food at my home, and have a very different outlook on life. I've always loved traveling, and more significantly, adventure. Living, working, and thriving in a foreign country would be thrilling and exhilarating. In America, I feel tempted by things like greed and gluttony. I want, and because I'm American, I will have, it seems. Being at a 24/7 Starbucks doesn't help either, fueling my interest in an irregular and odd sleep schedule (haha). My dislikesness for sleep is for a different entry, though :).
-Christopher 🎶🎵