As tough as it can seem to be to keep up with the ever rising cost of living in Australia, for the most part we Aussies are actually living a pretty comfortable life. Obviously that’s not the case for everyone, but as a generalisation it’s true even if it doesn’t feel that way sometimes. The problem for most of us is not that we can’t have anything that we want, it’s that we can’t have everything that we want.
What I mean by this is that if we want to go on an overseas holiday every year lots of us can afford it. If we want to eat out a couple of times a week, we can afford that. If we want to drive a brand new luxury car, we can afford that. If we want to put some money aside so we can retire early, we can afford that. The problem is that we can’t do all of those things.
Let’s say that after meeting all of our living costs we have a surplus of $10,000. Every dollar from that surplus that we spend on an overseas holiday is a dollar that we can’t put towards a luxury car or eating out or saving for an early retirement. And if we use all of that $10,000 for one purpose, then there is no money left over for the other stuff (unless we borrow for that which is not a good idea).
Social media makes this even worse because the fun stuff is in your face all the time. We all see the posts on Facebook or Instagram or Snapchat or whatever of our friends on a glamorous holiday, or eating out at some cool new restaurant, or driving some nice new wheels. We also tend to blend all of those things into one, so we think that our friends are getting to have all of those fun things, when in reality it’s only one. We also don’t know if they’re paying for it out of surplus cash or if they’re borrowing to do it. In any case it isn’t really much of a surprise that as a result we feel like we’re missing out if we’re not doing those things ourselves.
What we need to keep in mind though is that every dollar that our friends are spending on this is a dollar that can’t be invested to bring forward their financial independence and retirement. That’s the tradeoff. Now maybe that’s a tradeoff they are willing to make, although it’s a pretty good bet that they aren’t actually consciously thinking about it. In any case good luck to them, but if your main priority is FIRE then there is likely to be a lot less of the other fun stuff unless you’re on a very high income.
As a family we’re in a pretty good position financially already, but we’re certainly nowhere near the point where we aren’t making tradeoffs between FIRE and all of the fun stuff now. The good thing about having kids though is that as much as you want to do more of that stuff, you know it can be a massive hassle just to eat a meal out let alone travelling, so your spending on those big ticket items is naturally curbed somewhat.
Don’t get me wrong travel with children can be done and our eldest child has already been to half a dozen different countries, but that was before the second child came along. Nowadays we have far less desire to try and get both of them to and from the airport, keep them entertained on a plane for however many hours, then sort out the logistics with renting a car and installing car seats at the other end etc. So international and even domestic travel is very much on the backburner at the moment!
Likewise even if we were into fancy cars there isn’t much point in buying one if you’re going to have two kids making a mess of it pretty much straight away. I know lots of families buy SUVs to transport their kids and all the gear around, but we’ve had no problem whatsoever with getting two adults, two kids with baby seats and all the associated gear including prams into a mid size sedan.
So if you’re lucky a lot of those tradeoffs aren’t really tradeoffs for you anyway because you’re perfectly content with not doing a lot of that stuff. The flip side of this is of course that kids do come with a lot of associated costs, but there is a lot you can do to try and keep those costs down as I posted about here!
What tradeoffs have you made to save more towards FIRE? If you liked this post and would like to read more like it then please subscribe using the link on the right!
Although not quite at the stage you are at (recently gotten into a relationship, no kids anytime soon), I’ve still had to make sacrifices in order to get closer to my goal of achieving FIRE as any progress I make now pushes me closer to the end before I decide to have a family of my own.
I’ve made small sacrifices like bringing lunch from home into work 4 days of the week and go out with friends for lunch every Friday – yes I save a lot of money this way but it’s nice to go out and enjoy lunch once a week.
Even other things like dodging the daily take-away cup of coffee and asking our boss for a machine at work has made that $4 habit into a 40 cent habit every day. It all goes a long way!
I tend to bring in leftovers or some sort of prepared lunch from home, costs a couple of bucks at most that way vs at least $10 if I’m buying something, plus it’s probably healthier as well. Combine that with just having coffee at work and buying soft drink in bulk rather than for $3 a bottle at the supermarket and you can avoid spending a lot of money and put that towards your FIRE goal.