By Felicity DuncanÂ
The South African middle class (and those who aspire to join it) isn’t getting much of a break these days. Wages aren’t keeping pace with inflation, the cost of education and healthcare is rising, and there are so many extras to pay for – private security, a backup generator, and so on. House prices – an important source of wealth for the middle class – are stagnant or slumping, and the stock market – where most of the middle class has its retirement savings – is in the doldrums.
In this situation, what is one to do? How do you manage the relentless anxiety that comes with feeling financially pressured? How do you become financially free?
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Obviously, financial freedom means different things to different people. But for our purposes today, financial freedom simply means being free from relentless financial anxiety. I’m not talking about fulfilling your wildest financial dreams or retiring at 35 here. I’m just talking about finding a way to get away from financial worries, to reduce the mental health cost of money woes. Unlike being a multi-billionaire, this type of financial freedom is possible for many of us.
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My prescription for achieving this modest goal is itself modest: Downscale. Adjust your financial and material expectations downward. Look for non-financial ways to enrich your life and let go, once and for all, of the need to achieve a certain lifestyle.
You see, there are two types of financial anxiety: the avoidable and the unavoidable. Worrying about putting food on the table because you have lost your job is unavoidable. But worrying about making the payments on your two-year-old luxury SUV is avoidable. Drive a cheaper car.
Many of us think that our financial problems fall into the “unavoidable” category. But for many of us, that’s not true. Many of our financial problems are avoidable – they are the product of our lifestyle choices and there are ways we can overcome them to achieve financial freedom.
The problem is simply that far too many of us think that we need to live the most expensive lifestyle we can. We need to drive the best car we can afford, buy the best house we can afford, eat the fanciest food we can afford.
We pursue these things, and then when something bad happens, like an inflationary jolt or a tax increase, we realise that we can’t really afford the nice things we have. We’re stuck in a financial prison of our own making.
I see this disease a lot among my friends and acquaintances. Many of them set a great store on having nice things – expensive clothes, nice cars, fancy holidays. Yet they are the first to complain about high taxes or rising prices and to feel pinched when times get tougher.
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Luckily, there is a remedy for this: Settle for less.
In my family, many of us have worked hard to learn to live with less. It can be done. My mother, who is retired, works part-time as a tutor. Her retirement savings are more or less enough to live on, but she prefers to be thrifty and safe. She saves most of her extra earnings and lives what many would consider a poor lifestyle. She cooks at home, drives an old car, lives in a small townhouse, and rarely splurges on new clothes.
Instead, she searches for joy in community and service. She loves working with kids who are having a hard time. She is in a walking club with her neighbours – enjoying a free exercise routine along with camaraderie. She spends time reading and writing and is active in her church.
While her life may seem “poor” in material terms, it is rich in emotional and social terms. If she lived at the edge of her means she could have a nice car or eat out regularly or live in a bigger house. But she would also worry more about her money lasting, about unexpected bills, about making sure ends keep meeting. Living below her means is a mental health investment and that’s financial freedom.
If you are worrying about money, take a moment to assess whether your anxiety is avoidable or not. Obviously, if you are facing genuine, unavoidable financial problems, then downscaling is not a helpful strategy: you’re already living too close to the bone.
But if your financial problems could be eased by accepting a less expensive lifestyle, I invite you to explore that option. I think you’ll find that having friends over for a potluck is as fun and satisfying as an expensive meal out, and that spending the weekend playing board games and taking walks with your children is even more emotionally nourishing than buying them the latest gadgets and video games.
