Jonathan’s Parting Thoughts: No. 7

Financial success is driven by good savings habits—and for that we need low fixed living costs.

I spent 20 years in a house that was far less expensive than I could afford. This isn’t a strategy I recommend, because I never much liked the house. Still, it came with a huge silver lining: The modest monthly house payments allowed me to save great gobs of money.

My sense is that most folks aren’t naturally inclined to save. But even if they are, they may find it impossible to sock away a healthy sum each month if they’re hemmed in by high fixed living costs, such as mortgage or rent, car payments, property taxes, insurance premiums, student-loan payments and so on.

My advice: Think long and hard before taking on any recurring monthly or annual expense, no matter how small. Such expenses not only crimp our ability to save, but also they could cause stress, because we’ll have less financial breathing room.