Be clear and intentional about the lifestyle that’s best for you

For most of us, lifestyle is an ambiguous concept that loosely relates to how much money you spend. For the wise consumer, lifestyle reflects the intentional decisions they make about when and how they spend their money, time, and energy. Lifestyle is not something that automatically flows from their job and perceived social class; it’s a choice. Or, really, a series of choices. Sadly, this is not always possible. Poverty is a real issue for many people. The poor have limited financial resources and, more often than not, limited time and energy. These are the Vulnerable Consumers that I described in an earlier blog about consumer types.

And, of course, debt is a big problem for many of us and is not limited to people who appear poor, feel poor, or who would be categorized as poor based on their income. Not all debt is bad. Mortgages are inevitable for most homeowners at some point – though in a minute we’ll explore how that can go wrong, too. And, many of us have education loans to deal with as well. Then there are car loans, store credit cards, general credit cards, and all of the contracts that we sign committing to future payments for all sorts of services and products. Debt can have a crippling effect on your long-term financial health, with ripple effects on other aspects of well-being (mental health, relationship quality, etc.). Dealing with debt is especially challenging when it’s not just situational – like making monthly school loan payments for a few years – but instead is part of a lifestyle that reflects certain attitudes underlying spending behaviors. Karma explains how she and her husband think about debt, and the lessons they are trying to pass onto their daughter about avoiding the “slippery slope” of a debt-funded lifestyle:

“I would tell her not to acquire any debt because that is what starts—I think it starts giving you this vision that it just doesn’t matter anymore if you acquire a lot of debt. You might as well acquire some more. I’ll make my payment, whatever. Keep using my card. I mean I think that’s a really slippery slope that we’ve tried to avoid.”

Even for those of us who are not financially poor or in debt, there will be periods in life that might feel out of balance, and that can be ok in bursts for the right reasons. Starting a new job? Working part-time while earning a degree or certificate? Raising young children? There might be times when we realize that things are going to feel out of balance. That is part of the work that wise consumers accept, doing their best to balance how they use their resources over the course of time – neither focusing exclusively on the present nor on the future. Lifestyle is, therefore, also fluid. It changes throughout the stages of our lives and as our situations change. But it shouldn’t be something that just happens without considering how our choices affect our lifestyle. Consider Jenn’s thought process as she and her husband were buying their first home:

“And so we ended up buying this place…. Normally you go to the bank and you say, “How much money will you give me?” And I went instead and said, “Okay well this is how much I want to pay, and this is how much I want to pay a month.” … And then we went to—afterwards when we actually went to the loan guy and we’re signing the paperwork, I said, ‘All right, Paul wants to know how much would you have given us?’ And it was, you know, 150,000 dollars more than our house. We could have bought a whole separate house with the amount of money they would have given us. And I was like that’s crazy. I would’ve spent all of our money—we could’ve made it, but why would I want to spend all of my money on the mortgage when I could be spending this much money on the mortgage and this much money on travel? Or doing whatever I want. I don’t want to be locked into my house and I can’t ever leave it because now I don’t have any more money.”

For most of us, there are many lifestyle options that each represent different values and priorities – and that have different well-being outcomes. Defining your lifestyle is easier when you are first clear about what it isn’t, or shouldn’t be: living way beyond your means, trying to keep up with celebrity culture and the latest fast-fashion trends, buying into Christmas ad dreams of purchasing matching his and hers luxury SUVs. Or, even worse, letting consumption itself be part of your lifestyle. This might seem obvious, but if you don’t explicitly acknowledge that certain patterns of aspirational spending are not in your interest, you risk setting yourself up for ongoing comparisons and envy. Recognizing this doesn’t depend on years of personal experience, as illustrated by Caleb, a teenager from Portland Oregon:

“I kinda have everything that I could ever ask for…I guess because for the most part, I don’t feel like I ask for tons. So as long as you don’t ask for everything, you’ll be happier…because you’re less likely to get everything. So if you just ask for the things you need and occasionally something that just would be really fun, then you’re more likely to be happy because you’re more likely to get it.”

This may seem simplistic and certainly the resources and needs of a teenager living at home don’t reflect the complicated reality of the typical adult or household. But, Caleb’s intuition is supported by a lot of psychology research; your subjective well-being (what you experience) is as dependent on your expectations as it is on your objective reality (where you live, what you own, etc.).

One of the challenges as we grow older and, typically, as our income increases is “lifestyle creep.” Lifestyle creep describes the tendency to spend more over time on luxuries as your income increases – or, worse, while your income remains flat. Going out more often to nicer places, buying more expensive clothes, upgrading vacations. All of these seemingly smaller expenses add up over time. Nobody really sets out to spend more than they can afford, yet it’s a very common phenomenon in modern society. About one-third of US households live “hand-to-mouth,” spending all of their income each pay period, with nothing left over. Only a third of these households qualify as “poor,” with the other two-thirds, the “wealthy poor,” who have higher incomes and some assets but who regularly spend more than they can reasonably afford. We assume that the neighbor with a luxury car or the acquaintance whose family just returned from another cruise vacation is wealthy. And they might be. But it’s just about as likely that they have minimal savings, a large mortgage, high car payments, and lingering stress that comes from having no buffer to deal with emergencies, no real hope for a comfortable retirement, and a nagging sense of being stuck in an unsustainable lifestyle motivated more by identity affirmation than the pursuit of genuine well-being.

A key to avoiding temptation is to orient your thinking about what you really need and want (your chosen lifestyle) instead of constantly focusing on what you can’t have or really don’t need. Instead of constantly feeling as though you are missing out, define a lifestyle – as part of your identity – that you can actively embrace.

(Liz) “I guess my philosophy is to have a life that you’re really happy in so you don’t feel like you’re always having to spend to make yourself happier. So I’m pretty happy with my job and my family situation. And my life makes me pretty happy. I don’t need to spend money to make myself happier. So I don’t know. I think my family growing up was like that too. We weren’t spenders really. We were savers, did things together, fun. Games and sailing and taking walks and spending time together. That’s where we got happiness from. Not from “let’s go to the mall and see what we can get. I can’t wait.” That never really appealed to anyone in our household growing up I don’t think, or in our household now.”

So, what lifestyle is best for you, now? Think broadly about where you live, work, and play. And consider all of the resources mentioned before: money, time, and energy. You can approach this thinking about your individual situation, or consider it from a family or household perspective.

LIVE: How do you feel about where you live – your apartment/house and neighborhood/community? Are you close to people you care about and things that you need?

WORK: What is a typical work week like for you? How much time do you spend commuting? Do you enjoy your work? And are you making enough money to support your lifestyle now and build towards longer-term goals?

PLAY: How much “free time” do you have and how do you actually spend it? How do you feel throughout the week? And if your work follows a traditional work-week, how do you feel in the evenings and on weekends?

As you imagine a typical week, think about what is working well, and what you might want to change. There is no one-size-fits-all approach. Wise consumers reflect on what they most need and want, and are willing to explore options and, when warranted, to make some changes in their lives – sometimes small, and other times much more significant.

So, with some reflection on your current lifestyle, work on defining a lifestyle vision that you believe best aligns your needs, values, and resource – given your current situation. Once again, consider the dimensions identified above, Live, Work, and Play, and elaborate enough on each to help motivate and guide any decisions and specific actions that you want to take in the future, noting a target timeline for decisions/actions that won’t happen overnight (e.g., new job, new neighborhood, etc.).

Next Don’t waste your money or time (and keep things simple!)

Leave a Reply