What keeps you from becoming a millionaire?

I know what you’re thinking. If only I could win the lottery. If only I could inherit the money. If only I could become famous. Yeah, I’ve joked about those things myself. But the truth is that most people build their wealth from investing and saving diligently, not from a random number or phone call.

So what’s keeping you from investing more? The answer may not be what you’re expecting.

The Survey Says . . .

In 2016, Ramsey Solutions commissioned a survey of over 1,000 adults to evaluate the state of retirement in America. When we asked those people what was keeping them from saving and investing more for retirement, their biggest obstacle wasn’t student loans. It wasn’t credit card debt, lack of planning, their mortgage or even procrastination.

The biggest obstacle? Cost of living.

I know you’re nodding your head. Of course you’d invest more if you could live on less. But perhaps you can. And it starts with a shift in your thinking.

Redefining the Cost of Living

The cost of living is the amount of money it takes to keep your household running from month to month: food, housing (including utilities), transportation, and clothes (reasonable spending, not a shopping spree). You need these things to work and live. And I mean need.

Here’s the problem: Too many people confuse their wants and their needs. And when you get those two things confused, you think cost of living is the reason you can’t save more for retirement. For most people, though, it’s not about cost of living. It’s about lifestyle expectations.

I know, some of you are stretching your money as far as possible. You’re living well beneath your means and you’re doing everything you can to save and invest. But a good number of people—possibly even you—are spending money on wants, not needs.

One Example: Kids’ Activities

A great example is the cost of kids’ extracurricular activities. Parents are spending anywhere from $500 to $5,000 or more on sports, lessons, music, equipment, traveling, and the like. Yes, $5,000—or more. Let’s put that in perspective. If you’re making $50,000 a year, that’s 10% of your income! Some people are shelling out that much for their kids’ activities, but they aren’t even putting away 5% in their retirement fund. That’s not okay!

Now if you can afford to pay for your kids’ travel team, violin lessons, or art classes and save at least 15% of your income for retirement, that’s great. But I’m willing to bet that the average middle-class American can’t afford both. Because retirement seems a long way off, you put that off in favor of kids’ activities. And that’s just one example of misplaced spending priorities.

Other Wants, Not Needs

Now, I’m not just picking on parents. There are lots of other ways you can get your wants and needs confused. For example, do you need that much house? What about that expensive car? You can probably drive a used sedan for a lot less. That boat? Great for family get-togethers, but definitely not a necessity.

Maybe your traps are the little things that add up. The satellite bill. That skin care line. Drinks at the restaurant. Summer vacation. Designer shoes. Clothes you don’t need. Are those things bad? Of course not. It’s okay to have things. It’s okay to go places and do things. But not if it means you’ll have to move in with your kids later because you aren’t saving enough for retirement now.

The Solution: Let’s Get Real

Let’s get real, folks. You don’t need a pool in your backyard. You don’t need a vacation in the Bahamas, the latest cell phone, or another piece of jewelry. Your kids don’t need $200 jeans. Those are all wants. And while I’m being honest, here’s another truth: The chances of your kid becoming a sports star, violin virtuoso, or painting prodigy are slim to none. It won’t matter how many camps, private lessons, or special events you pay for.

If you’re wanting to put more away for retirement, the solution is simple but difficult: Tell yourself no. Tell your kids no. Set limits. Create a budget that’s based on necessities, not keeping up with the Joneses. Choose a less expensive option. Go on a stay-cation. Plan for the future, not just the next activity or season.

With enough time and compound interest, you can become a millionaire. Or at least you’ll have the money to enjoy that retirement you’ve been dreaming about.

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