Live like a student to save money

[Sid Hoffman]

Thanks to Yale's respected Robert Shiller, also a Nobel prize winner saying it, suddenly it's news that you can save money by not just upping your spending as your income increases:

http://finance.yahoo.com/news/how-to-bank-hundreds-of-dollars-more-each-month-163549084.html

Robert Shiller, the Nobel Prize-winning economist, offered some simple advice for people trying to get ahead when he visited Yahoo Finance recently: Live like a student.

“My students are living alright,” Shiller said. “I’ve suggested to them, why don’t you just continue to live at that level after you get a job? It would pile up into a lot of money.”

Struggling workers might take offense at a comfortable, accomplished Yale professor suggesting middle-class Americans should subsist on ramen noodles and hand-me-down furniture.

...

If I were able to fend off lifestyle creep and feel happy with less — to return, in modest ways, to the more frugal habits of earlier days — it would make a big difference. If I could save an additional $500 a month, it would add up to $200,000 after 20 years, assuming a reasonable 5% annualized return. That nugget might end up bigger or smaller depending on when you start and how much you sock away, but any amount of untouched principal will expand itself thanks to compounding over time.

[AllieVaulter]

Why is everyone so easily offended?  Suggesting people live within their means should be the least offensive thing ever. 

Yahoo wrote a good article, and then ended it with this:

Besides, what’s wrong with spending a bit of my hard-earned pay on heated seats? I deserve to be comfortable, don’t I?

Which will probably counter act any good that came from people reading the article.  Why couldn't he have said something like, "while the comfort of heated seats is very appealing, it's more important to make sure you're able to retire in comfort"?

[mtnrider]

Why is everyone so easily offended?  Suggesting people live within their means should be the least offensive thing ever. 

Yahoo wrote a good article, and then ended it with this:

Besides, what’s wrong with spending a bit of my hard-earned pay on heated seats? I deserve to be comfortable, don’t I?

Which will probably counter act any good that came from people reading the article.  Why couldn't he have said something like, "while the comfort of heated seats is very appealing, it's more important to make sure you're able to retire in comfort"?

If the author wants/deserves heated seats, I say let him get them.  Life is full of tradeoffs.  As long as it's really only "a bit" of his hard-earned pay, splurging every once in a while is OK, IMHO.

[Said by the guy without heated seats, and who lives the collage student lifestyle two decades after graduation.]

[clarkfan1979]

This was suggested to me multiple times when I was a student from my profs. Now I suggest this to my students every semester. How do we know that the Yale prof isn't frugal?

One of my profs in undergrad spoke about exponential growth and investing on the last day of class. A very modest and entertaining prof of about 65 years of age. He told everyone that he loves his job, but doesn't need to work because he is worth about 10 million.

As a 21 year old, it really hit me that its possible to accumulate a lot of wealth without a high paying corporate sole sucking salary. I really hope that I can tell my students the same thing when I am 65. However, adjusting for inflation, my number will probably have to be around 15 million. It's a lofty goal, but doable.

[I'm a red panda]

This is how I paid for my Masters degree.

I had been working full time, my husband getting a small stipend while doing his PhD.  When he  got a job after the PhD, we just didn't change anything in our lifestyle while I went to school.  Didn't even notice the thousands gushing out of the bank account for my degree.  We actually increased our net worth during that period, because his increase in income was greater than the (ridiculous amount) I spent on my degree.  (And I kept working full time.)