Day 56: Financial Self Sufficiency

Dear Student,

Can being more self-sufficient actually save real money… or is it just for people who don’t have a job?

This table gives the average 2015 spending of U.S. households on what we consider the basic necessities:

Sources: Gallup.com; U.S. Bureau of Labor Statistics

Food

An average of US$7,852 is spent on food by the average U.S. household per year. A large portion of this expenditure is on low-quality processed foods grown with chemical pesticides and fungicides.

Such foodstuffs are known to have direct links to some of the diseases that cost the average person thousands of dollars per year in medical expenses and lost income (diabetes, heart disease, obesity, asthma, cancer to name but a few).

With the correct information, it can be easy to replace a large portion of your food expenditure with homegrown, nutritious, and practically free food, grown in your own garden. This adds up to savings of up to and exceeding US$7,852 every year for the average household.

And this supposes that you won’t sell any of your produce to friends and neighbors for a profit, which you should well be able to do, so the figure allocated for this could be much higher than simply saving the cost of your own food—you could produce an additional income, too.

Insurance And Pensions

Personal insurances (including health, vehicle, other; excluding home insurance) and pensions cost the average American US$5,726 per year.

Stressful work environments and lack of exercise are (along with processed food) a major contributor to health problems. Healthy food and light exercise in pleasant environments—like your own backyard micro farm—can mitigate these effects and save you money. Being able to reduce work hours from your regular job or eventually working from home full-time can have many long-term benefits.

Living a self-sufficient lifestyle should reduce medical and insurance bills through a healthier and freer lifestyle.

Similarly, people put huge amounts of money into their pension plans over their lifetime, but, once adjusted for inflation, they rarely receive back anything like the amount they invested. Unfortunately, an investment in your pension is actually more likely a loss leader.

Having a self-sufficient homestead, small or large, doesn’t need a lot of work and can pay fruitful dividends to you and your family until and after the day you die. Even a small self-sufficiency setup is much better investment in the long-term for the time and money put in than the same amount of start-up capital invested into your pension.

The once-off, small amount of seed capital invested in your own mini farm can generate much more income in your lifetime than the same amount invested in your pension (might) pay out… and your investment is right there in your backyard, impervious to any financial crash or crisis.

Transportation

For nearly US$10,000 a year on average, transport is the second-highest money suck there is in modern life.

Commuting to and from work every day and traveling to grocery stores and medical appointments are some of the biggest uses of personal vehicles. If you removed some of these nearly daily tasks, either by one spouse working from home or simply having to work fewer days per month, you could reap significant savings.

Having to travel fewer miles might make the decision to purchase a less expensive and more fuel-efficient vehicle easier, saving you more again.

Many families neither want nor can afford to give up both the paying incomes in a household, but major economies and savings are still possible.

Housing

Finally, for about US$17,798 per year for the average American, housing is the biggest single cost one incurs on a regular basis.

And this can be the most difficult area for newcomer to the self-sufficiency movement to replace with a more self-sufficient option…

We’ve discussed some alternatives throughout the course, including the possibility of tiny homes, underground homes, and ways to make your home more self-sufficient and less costly to maintain.

Before making the commitment to a new, more efficient home of some kind, simple and effective strategies, like investing in correct insulation, can save large amounts on heating and cooling in the meantime.

Many keen debt-free enthusiasts decide to move into small cottages or even tiny homes for a couple of years until they get out of debt and have enough cash to purchase their next home loan free.

Power

The average household spends US$1,320 per year on electricity and some spend much more. Following an energy reduction and saving program and investing in home power generation systems like solar and wind generators can save you half this cost or more over the system’s lifetime.

Countries where power is more expensive than the United States will see much higher savings from this segment.

The Bottom Line

I’d say based on the outlines above, most households could manage to save up to and over US$20,000 a year by opting for a more self-sufficient lifestyle. And keep in mind that those are pre-tax dollars.

These savings could be achieved in as little as an hour or two per day. Working 7 to 14 hours a week, from the comfort of your own backyard, all this could be achieved.

Taking the above number of pre-tax dollars saved and equating that over a 7- to 14-hour week, we quickly see how lucrative a self-sufficient lifestyle can be. To me, it’s the perfect solution for so many people trapped in unrewarding jobs and feeling the guilt of family pressures.

If we stick with the US$20,000 per year figure, divide by 52 weeks, and then by 7 to 14 hours per week, you’d be earning US$42 to US$84 per hour for the work done.

Imagine that: After the initial work involved in setting up your self-sufficient homestead, you can reap the benefit of professional-standard wages—all from your own work in your own backyard. (Not to mention the new fantastic lifestyle habits.)

And the figures used in the example here don’t include any income from any other independent income streams, like the many potential cottage industries that you might start.

Of course, because the idea of self-sufficiency is so customizable, it’s impossible to say exactly how much you’d save by putting these ideas to work for you. I think of the concept as modular—you take what you want and put it to work for you, leaving what you decide isn’t for you.

If you or your spouse chose to give up a low- or middle-income job to become a backyard farmer, for example, your potential savings and productivity would increase significantly.

Plus…

• No time lost commuting to work…
• No money wasted on childcare (you work from your backyard, so get the little troublemakers to help—it’ll wear them out for bedtime)…
• No bosses stressing you…
• You don’t pay taxes on what you produce (unless you get into a major retail operation)…
• You can sell extra produce for profit…
• Your garden routine is your daily workout…
• More time with your family and friends and nature…

Savings and earnings not considered…

• Low-cost, effective homemade cleaning products…
• Lower water bills…
• No spending on chemical pesticides, herbicides and fertilizers…
• Medical bills not covered by insurance could be reduced due to a healthier lifestyle…
• Income from dozens of potential cottage industries…

Take it one step at a time… You don’t have to quit your job tomorrow, you can gain skills and explore your markets before going all the way.