Receive regular updates via email

How Living Cheap, Looking Rich Can Help Your Personal Finance and Career in Recession

Live Cheap, Look RichLiving below your means doesn’t seem a desirable decision to survive today’s recession.

There are better ways, and although living below your means are the next logical step when you are in financial strain, your sense of achievement must be maintained.

Why is that?

In order to keep yourself on track in navigating through the economic storm, you need to stay focus. Staying focus can be achieved through the fulfillment of your need for achievement – and living below your mean is not the way to fulfill yours.

Live cheap, look rich

Living cheap is not living below your means. Living cheap means living within a closely controlled budget to achieve the living standard that anybody else has on a higher budget.

The main idea of living cheap, looking rich is to aim to get the best deal in every way, including clothing, entertainment, etc. in such a way that nobody would know that you spend less for the look you have right now.

‘Look’ here is not only clothing, accessories, or any other apparel and fashion related products – ‘look’ is your lifestyle, in a standard that can’t be achieved by living below your means.

‘Look’ is going to Starbucks occasionally, and socialise with your friends and colleagues. ‘Look’ is how people perceive of you, no matter you achieve ‘it’ by bootstrapping. You shouldn’t overdo them, though.

The key in living cheap is total control of your budget.

Why living cheap, looking rich is smart

We live in a society that value physical appearance, lifestyle and charisma. Enhancing yours will actually help you land better job, secure more business, or socialise with more people (which can present you with more opportunities) – all in all will affect your bottom line: your personal finance, in a positive way.

You deal with people, and most of them don’t really care how much you make – what they care is what they see, and how they preceive of you. For example, in a meeting with business prospect, you need a professional look that commands confidence, charisma, and trustworthy. You don’t want to meet your future client in your t-shirt, don’t you.

How to live cheap, look rich

There are ways you can consider to live cheap but look rich:

  • If you are into fashion and business as well, purchase your clothing needs with a wholesaler. While hard to find, wholesale clothes can save you a lot of money. The problem is, they usually only allow you to buy in bulk (usually in half-dozen or dozen).
  • Alternatively, you can shop in consignment and/or discount stores.
  • Shop for everything on the web – groceries, clothing, accessories, electronics, travel deals, etc. You can always receive a lower price for the same item you want.
  • Attend charity events and/or be volunteer. Charity events – the large one – are where socialites and celebrities. Attending the events, as an attendee or a volunteer will help you raise your profile.
  • Purchase used car – no body is really care how much you pay for the car, as long as its condition is top-notch.

Remember, don’t live below your means – Live cheap, look rich. That is good for your economics and, in effect, your personal finance endeavour.

Image by net_efekt.

The Psychology of Budgeting

I confess, I am an optimist.

Not a wide eyed and naïve one, rather I am a cautious optimist who tries to plan ahead for things. Sadly, my optimism does someone lead me to underestimate things.

A recent study from the University of Southern California called “Will I Spend More in 12 Months or a Year? The Effect of Ease of Estimation and Confidence on Budget Estimates.” suggests I am not alone in letting optimism lead me to underestimate things, at least in the short term. The research indicated that consumers had a tendency to be over-confident when making estimates for short-term budgets. However, when making long-term budgets, consumers tended to be much more cautious in their estimates, as they acknowledge the greater potential for unexpected surprises.

The study does concede that monthly budgets function quite well for relatively predictable monthly bills, but when it comes to estimating more open-ended costs, our optimism can be our enemy.

Lead researcher Gülden Ülküman says, ‘When budgeting, it seems to be wiser to assume that one’s knowledge is unreliable.’ What are the applications of this? Well, as a starting point, you might see budgeting software asking you questions to make you question your assumptions and feel less confident about the estimates you make when compiling a budget. How can you make use of this knowledge? Well, to start with, let your inner pessimist come out and play when compiling a budget. We’re often taught that a negative attitude can cause us problems later on, but it appears that in this instance, pessimism is the winning strategy. As an optimist, I hate to concede them the point, but it’s hard to argue with science, especially when it matches what I have seen in the real world so very well.