A friend once came to me for financial advice. He made pretty good money, had no real debt, no kids, no health problems, no mortgage. On paper, he should have been doing just fine.
It was a different story in real life. He was constantly stressed, living from paycheck to paycheck. He had no savings, yet had nothing to show for all his spending. The expression on his face could be spelled out in four capital letters: HELP.
All I could do was offer some basic tips -- tips I would give to anyone, regardless of their circumstances. These tips have saved me plenty of cash and heartache over the years. They can do the same for you:
1. Live like the bonus is not going to hit.
When you go to work, work your butt off. Work like there’s no tomorrow. Strive for that bonus as hard as you can, but in your regular, everyday life, behave as if it’s just out of reach.
Never increase your cost of living above what your baseline income is. Never. Apply this rule to everything. If it’s the weekend, and you can’t afford to eat at Chili’s, eat at Wendy’s. If you can’t afford to eat at Wendy’s, grab a Digiorno’s and eat at home.
You don’t have to see the latest summer blockbuster on opening night. You can wait till it comes to the dollar theater or rent it online. All of these tiny sacrifices will build up into significant savings. When the bonus does finally hit, you’ll have learned a lot about willpower in the meantime.
2. Save for a rainy day.
We’ve all heard this one a thousand times, but according to a recent report by CNBC, only 29 percent of Americans have at least six months of emergency expenses set aside. A disheartening 55 million Americans have no emergency fund at all.
You don’t control the weather. Rainy days come; be ready for them. It’s one of the only things that’s certain. Some people are better at forecasting disaster than others, but most of us never see it coming. A lost job, a sick family member -- you can’t predict it.
If you don’t live below your means, if you don’t have cash set aside, and you’re suddenly faced with a crisis, you’re certain to move with a haste that wouldn’t be necessary if you’d just prepared a little. You’ll run up debt on your credit cards, for instance. Or you’ll take the first crappy job that comes your way, versus having an extra month or two to search for a better gig.
3. Choose a conservative lifestyle.
Lifestyle is super hard to dial back. Once you get used to a certain level of luxury, downgrading is almost impossible. Let’s say that, owing to your rising income level, you’ve moved from Digiorno’s to Wendy’s to Chili’s to The Cheesecake Factory to Ruth’s Chris Steak House.
That’s quite a climb. But here’s my advice: Even if you can afford a higher tier of comfort, stick with the next lower tier as long as you can. Buy your groceries at Walmart way past the date you can budget in Target. Buy your groceries at Target way, way past the date you can budget in Whole Foods.
This is true of restaurants, it’s true of cars, it’s true of the place you choose to live, the electronics that keep you connected. When I started my current company, for example, my income went to zero for the first time in my adult life. My wife Rachel and I had become a Ruth’s Chris couple by then. It took two years to return to my former salary, yet in those two years we did not successfully dial back our lifestyle in any reasonable fashion. I was raised on a farm; I consider myself a disciplined person and an expert in matters of money and credit; but it was still extremely difficult to do.
If we’d climbed the luxury ladder a little slower when times were good, we wouldn’t have burned through our savings when times were tough. No matter where you are on the ladder, life only gets more expensive. Practice self-restraint on the spend side of the equation at every single stage.
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This article originally appeared on Entrepreneur.com. Minor edits have been done by the Entrepreneur.com.ph editors.