“Financially Efficient” just means you make the most with your money.
In business terms, it’s the net margin. In personal finance terms, it’s your savings rate.
We work with people at all ends of the spectrum.
Financial Zen Members save anywhere from 5% to up to 65% of their earnings.
(And yes, we have many examples of people who live in the very expensive Bay Area with kids at home who are still in the upper range.)
Success leaves clues. So what are the clues left by those with the highest savings rate?
Almost all of them were broke at one point.
Okay, maybe not broke, broke, but they made very little money early in their careers.
That forced them to learn to live on very little. They always had roommates, they didn’t travel much, they only ate out on occasion, etc.
In other words, needing to stretch their money created smart spending habits during their most impressionable habit-forming years.
It’s very difficult to form a new habit or change an old one – good or bad.
So as their careers progressed and they made more and more money, their spending habits didn’t change much.
Maybe they went out and traveled a little more, but they never strayed too far from the habits they learned when they had no money.
And NOW they’re saving 50%+ of what they earn.
Speaking from experience, I’ve adjusted my lifestyle very little from my days as a struggling financial advisor.
And as result, I now save about 66% of what I make.
If you weren’t “lucky” enough to live hand-to-mouth at some point in your career, the next best way to form those habits is to save first, then spend.
Set up automatic transfers into your savings scheduled for each payday.
You’ll trick yourself into spending less because you’ll feel a little scarcity.
That said, the easiest way to reduce your lifestyle is to never increase it.
