“It took a lot of psychological reflection for me to no longer feel guilty about spending money,” he told CNBC Make It. “I didn’t have money as a child, so it gave me a sense of scarcity. Once I realized I had savings and money coming in, it took me a while to feel comfortable saying, ‘OK, I’m OK.'”
Jonathan and Jacqueline, 40 and 41 respectively, are co-founders of a financial literacy business. Parent PortfolioJacqueline now runs the company full time after retiring from a career as a pharmacist. Jonathan contributes to the company while continuing his day job as a software engineer. Jonathan oversees the couple’s real estate investments. Jacqueline manages the family’s books.
That might sound like they have a lot on their plate, and it is. But diversifying their income streams and staying frugal are some of the main reasons why the couple is now living comfortably — and spending money. Here are three tips for financial security.
Jonathan finds great peace of mind in knowing his wife has the budget under control. “My wife does a really good job of keeping all the books and managing a lot of money,” he says. “So if anything were to happen, we’re really in good hands.”
But for how long?
“We have cash reserves and if we adjust our budget and save a little, our savings will get us through 18 to 24 months if something catastrophic were to happen,” Jacqueline says.
That’s more than the three to six months’ worth of living expenses that most financial experts recommend. But here’s an important caveat that many savers overlook: When saving for your emergency fund, you don’t necessarily need to think about one month’s worth of your current living expenses. Rather, think about how you’d survive if a true financial emergency occurred.
“If you lost your job, you would change something, like cancel your gym membership or end a subscription,” Christine Benz, director of personal finance and retirement planning at Morningstar, previously told Make It. “Think about the bare minimum you need to get by.”
In the world of investing, advisors typically recommend spreading out the money in your portfolio across a variety of assets, reducing the risk that a big loss in any one investment could derail your plans.
The same concept applies to sources of income: If a salary is all you have, losing your job is a 100% loss of income. But if Jonathan lost his day job, the Sanchezes could count on income from their three rental properties and the cash they generate from their financial coaching business.
Diversifying their income streams helps the couple feel financially stable as they experience the normal ups and downs that come with starting and growing an online business.
It’s an important sentiment to have, especially when your business is subject to the opaque algorithms of internet search engines, says Jacqueline. “If you can adapt to that, you’ll be safe.”
In other words, the Sanchez family can start a new business knowing they have the ability to fall back on other sources of income if necessary.
“Going into real estate, starting a business and making big life changes required a lot of planning,” Jacqueline says. “I had a Plan B and a Plan C just in case.”
One of those plans is for Jacqueline, who effectively took a pay cut to run the website full time, to return to work.
“The skills I learned in college are still relevant. I went to pharmacy school and my license is still valid,” Jacqueline said. “For me, it’s like a peace of mind. I can always go back to work if the need arises.”
In the meantime, the couple have maintained a modest lifestyle and continue to live within their means in the relatively inexpensive city of Omaha, Nebraska.
Jonathan says he never spends money on fast fashion or trendy new clothes, choosing instead to maintain a simple wardrobe that he treasures, and Jacqueline says she still has some of the clothes she wore in high school.
“When you come into our house, you see furniture from when I was growing up in California,” Jacqueline says. “We just take care of things. We don’t waste things. So our frugal lifestyle is very much who we are.”
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