Money at 30: Prioritizing and Downsizing in the New Year
Finding your priorities
Often times when people are thinking about personal finance they tend to forget just how personal it can be. Although there are some hard and fast rules that are necessary in some cases, the truth is that there’s a lot to customize and not every seemingly right way is going to fit each person. Because of this subjectivity it’s always a good idea to reflect on what is most important to you.
Where do you want to live?
This might seem like an easy question but it isn’t always. For a time I was willing to pay a whole heck of a lot extra in rent — majorly throwing off my 50/30/20 finance breakdown — to live in Los Angeles and enjoy amenities few other places in the world could offer. However those amenities became less important and more expensive once I got married. As a result it was about this time two years ago that my wife and I decided to find a new hometown that offered some of what we loved about L.A. but at a much more reasonable price. If you’re finding that your priorities are shifting away from your current location, maybe it’s time to consider a move in the New Year.
Which is more important — time or money?
Another question that goes along with where you want to live is how long are you willing to spend commuting? Often times this question brings up the balance of time versus money. For example you may make more at your current job than one that might be closer to your home, but is it worth it? This is definitely something to ponder for 2017 — you might be surprised how much a commute or lack thereof can affect your quality of life.
What do you want to do?
There is more to life than just working and sleeping. As human beings we are compelled to enjoy and experience things with what little time we have on this earth. Whether that means spending as much time as possible with your family, taking in as much art and culture as you can, or traveling the world, these goals can also play an important role in how you manage your finances. Perhaps you’d rather take a job where you make less if it means more time off or maybe, like me, you decide it’s worth it to live in an area with a lower cost of living in order to afford more travel. Remember: don’t be so focused on making and saving money that you don’t get to enjoy life.
Considering a downsize
As I mentioned one of the biggest changes I made a couple of years ago was that my wife and I decided to move from Los Angeles, California to Springfield, Missouri. Partially through research and partially through luck, we stumbled upon a place that met many of our priorities. Beyond considerably cheaper rent in an area with plenty of walkability, my wife was able to get a job literally next door to our apartment, while I was still able to work from home. This not only allows us to spend more time together but also enables us to save for our futures, which has been important to both of us. Of course this required some downsizing on our part.
Surprisingly a full-on downsizing of your life can actually feel really good. Additionally it often fits perfectly into your plans to reprioritize. When it comes to downsizing here’s what you should ask yourself:
Do I really need all of this stuff?
It may not seem like the junk you’ve collected over the years is really a hindrance to your life but it actually could be. Before moving my wife and I made a major effort to sell, donate, or trash items we really didn’t need anymore. In the end this gave us less to pack up and more room in our new place.
However the largest bit of downsizing came after we moved. Once my wife secured her new job next door it became clear that there was no need for us to be a two car family. Instead I sold my vehicle and purchased something we really could make more use out of: a new computer. Likewise you could probably find some items you can say goodbye to in order to help finance some new needs or just make some extra room.
How will this help me in the future?
Admittedly there are times when downsizing isn’t the right move. For example you may own a house that might be too big for you now but will be perfect for the family you’re looking to start in the coming years. In cases like this it would be foolish to act on your immediate needs without considering your future plans. This isn’t to say to you shouldn’t make changes now for fear of how you might feel down the road, but it means you should definitely think out your ideal plan for the next five years or so before making major changes. The goal is to be thoughtful, logical, and wise — not impulsive.
Even if you’re not setting traditional New Year’s Resolutions for 2017, this time of year is ripe for contemplation. Maybe the best thing you can do in the new year is to make personal finance personal again and work toward giving your top priorities the most attention. Happy New Year!