Let’s go crazy and pigeon hole people into one of four categories, based on their earning and their spending.

*Before you gasp in horror, spit out your tea in fury and head butt your laptop in rage at the definitions of a ‘High Earner’ or a ‘Low Earner’, the whole post should be taken with a pinch of salt and a sprinkling of the surreal*

Low earners, high spenders – The credit generation
Financially, this is the most destructive group to be part of.  With bad personal finance knowledge and a desire to have everything right now this group shun the first law of personal finance.  They spend more than they earn.  I hear you howl in frustration, face lit up spookily by the light of your laptop, as you read this.  Good for you.

This group want to live and spend like ballers, believing that spending will bring them happiness and  somehow make them successful.

In reality, high earners can do this as well, it’s just spending more that you earn, be the earning high or low.

Low earners, low spenders – Frugal by nature

Through not having a lucrative job, actively shunning capitalism, or following a dream career that doesn’t pay great amounts these people are crafty and capable of stretching relatively little income far.
They search for the best deals, won’t buy things unless they need to and have mastered frugal skills, like gardening, cooking and DIY.

Despite their wizard-like skills of frugality they will never be particularly financially stable as they don’t earn enough to be able to build up a financial war chest for the rough times. 

High earners, high spenders – The Jones’
This group just love the high life that spending a substantial wage seems to offer them.

A big house, new cars, fancy clothes, buckets of latte and shiny things are the norm.  Thing is, this leaves little room for saving.

Whilst they appear rich, they are asset and time poor.  Nearly every minute is spent working to pay off their lifestyle, rushing about in the intervening periods between work.  To stop working would mean their lifestyle grinds to a halt.

High earners, low spenders – Goldilocks zone
In the Solar System of personal finance, there exists a ‘Goldilocks Zone’.  With a perfect combination of income and savings, this group are right within the zone for a Financially Independent life.  Life that is happy and self supporting (within a relatively few short years of work).

With a well paying career (although not necessarily ludicrous) and by living well below their means mean they can save in excess of 50% of their income.

The might be viewed as cheap by other groups, or perhaps hiding some sinister secret that is a black hole for money, but it is their habits that are helping to build a powerful collection of assets that will soon support Financially Independent life.

Matrix time
Thankfully we can see the world famous Mr-Zombie’s-Spendy-Matrix without the need for a blue or red pill, it handily shows the above in a single chart;

In terms of financial independence, the further you can move yourself into the top left of the matrix, the quicker your journey will be.  Transferring from the Frugal by Nature or The Jones’ zones require a change to either your income or your spending, but is possible with a few tweaks to your lifestyle.  The journey from the credit generation will be tougher, both earning and spending habits will need altering.  Tough, yes. Impossible, no.

Most of us hover around the middle, bouncing randomly a small amount into each quarter from month to month, like some cruel Brownian Motion that’s unable to settle.

Example time
Let’s have a quick look at the impact on your finances of being in each quadrant of Mr-Zombie’s-Spendy-Matrix.

Over the course of 10 years consider an individual from each of the areas with the following attributes;

The credit generation is living on credit cards so a 20% interest rate seems about right.  For the others, a 5% real growth rate is pretty standard, so I’ll roll with that.  I’ve actually used an after tax number in the example to keep things a bit more realistic, but other than that, that’s it.  Nice and simple.

The result is perhaps not that surprising, but it is staggering.

After a few short years anyone in the Goldilocks Zone (High Earner, Low Spender) has streaked ahead of all other parties, thanks to their consistently high savings rate.  With about £350k in the bank after 10 years they are nearly Financially independent using the old 4% rule as a basis.  4% of their assets is £13,776 and 35% of their after tax income is £14,744 (what they are actually living off).

It would take less than another year to become financially independent at this rate and under these conditions, i.e. for the theoretical ability of their assets to produce income/growth that exceeds their living expenses.

On the other hand the High Earner, High Spender (The Jones’) and the Low Earner, Low Spender (Frugal by nature) aren’t worlds apart, with £26k and £11k in assets respectively.  The Jones’s…all that money, with it’s savings & earning potential energy, frittered away over the years along side depreciating assets.  If you look at the above in isolation it seems madness to spend so frivolously, yet this is how many choose to live their lives.  And it is a choice.

The Low Earner, High Spender (The credit generation) at the bottom is heading towards the middle of a complete financial black hole, a seemingly never ending downwards spiral.  It doesn’t have to be a Low Earner of course, it’s just anyone spending more than they earn, breaking that all important first law of personal finance.

Just looking at the first year, and the differences in the approaches should be enough to convince anyone that upping your savings rate is what all the cool kids are doing.  And while you’re at it, try and increase your earnings.  At least for a few years to build up some helpful assets that earn income or can be drawndown as they grow.  Not everyone will earn a ridiculous income, nor is a large income everything, but steps towards improving their financial position and edging towards the upper left of the matrix is surely a good thing.

What, right now?
These things don’t follow a step function, a sudden violent wrenching and all-changing shift in your life.

You don’t transpose from one day earning a normal wage and saving 5% of your income to the next day earning £100k and saving 75% of your income, leaving some poor bastard in your old position.  It’s not like that, it’s a gradual shift, or a series of smaller step changes.

These things happen over a number of years.  It can be too easy to look at the likes of MMM, see a huge gulf between their lifestyle and yours, then conclude it’s impossible for you.

Around 3 and a half years ago I took the decision to retrain, at the age of 30.  It meant a substantial drop in salary and a lot more work to be done, with exams along side work.  I’m nearly at the end of this now, it’s been hard work but worth it.

It was far from an instant change.  It forced me to rebase my expenses, with a substantial decrease in salary it’s incredible how you can cut back on spending when you have to.  Luckily, as I was retraining, I found the world of Financial Independence and used this as an opportunity to stamp on the head of lifestyle inflation and up my savings rate as I went along.

Slowly getting there, it’s been a near four year journey to get myself towards the upper left hand side of the matrix rather than meaninglessly hanging around the middle.  There’s still a bit of work to be done to get my savings rate up to 65% 🙂

So yeah, you can make changes right now, but the impact might be a gradual shift, rather than an instant one.  Even if you are killing it on the earning side, habits can take a while to change, your lifestyle can take a while to adjust.  Increasing your earning probably isn’t going to be an instant thing either, it’ll take time and some hard work.

Time passes quicker than you think.  For me, this means getting into that top left hand corner and staying there for a few years.  Then, with Financial Independence in my tool belt, I can slow down, regain some headspace and stop time from zipping by so quickly.


[January Challenge update:  I have sacked off both alcohol and caffeine for January, in an attempt to be more healthy.  Blimey, this along side cycling everywhere is going to have me looking ripped.

It’s been just over a week.  The alcohol has been pretty easy, especially after the excesses of Christmas.  The only real challenge was going out for a curry with Mrs Z.  Something about a curry and a beer, it’s just such a good combination.  And it’s healthy too, right?

The caffeine was harder.  A headache clattered around my cranium throughout the second and third of January.  I found myself so tired by about 6pm, it was like I had been up at 5am each day and done 100 miles on the bike.

Surprisingly, the first week at work was actually fine, the main thing was getting out of the habit of drinking coffee or tea.  Getting up from a couple of minutes to make a hot drink is a (tiny) chance to recharge.  Replacing this with a cup of hot water seemed to help.  And as an added bonus, confused colleagues.]

17 thoughts on “Mr-Zombie’s-Spendy-Matrix

  1. weenie

    Such a simple matrix, yet one that so many people are not aware of, including myself until recently! That graph though just blows my mind!

    I'm not in the 'Goldilocks Zone', being an average earner, I'm sitting on the line between that zone and the 'Frugal by Nature' haha!

    So my graph wouldn't show such an impressive climb but it would still be better than the others.

    Good luck with your January Challenge update! I drink hot water at home but it would be terribly hard for me to give up tea at work!

  2. Anonymous

    This is a bit of a false graph for two reasons. First in reality the high earner/spender would have a higher saving rate than the lower earner, I think 10-15% on average. Second your graph ignores the value of NI contributions in building up pension entitlements and other benefits

  3. Mr Zombie

    Yeah, it's pretty amazing how much a few lifestyle changes can make!

    Same, we got to keep on saving and earning and working our way towards the ol' Goldilocks Zone 🙂

    The challenge hasn't been too bad, it's really the first 2-3 days that are tough. After than it's just the situations you put yourself in!


  4. Mr Zombie


    Thanks for your comment.

    I wanted to try and keep the examples as simple as possible.

    While they may well have a SR% of 10 – 15%, 5% is also possible. It was more to show how much leakage there could be in someone's finances. The average SR% for a Higher Earning could be higher through a company pension scheme alone. £60k also isn't *that* much of a high earner, if we were looking at someone earning £150k, say, your point would ring more true 🙂

    True, it does ignore NI contributions. It also ignores a potential defined benefit pension or the equity in any house they are paying off, fair to assume a high spender is spending some of that on a bigger residence.

    But it doesn't escape the fact that a low SR% is likely to lead to an unsustainable cost of living, when it comes to living off investments. (not a quality of life, plenty easy to have a good quality of life without spending loads, right?) And a much slower accumulation of relative wealth than is possible by upping SR%.

    Saving 10% may well net you a large enough NW for retirement, but the time you are 75, with some favourable tail winds. But who wants that! Up the SR%, and decrease the time to FI 🙂



  5. Dee S

    Great post. We downsized our lifestyle four years ago, which dramatically lowered our spending and has helped us to save and invest more than we thought possible over the last few years. Living below your means is really the only way to truly build wealth 🙂

  6. Mrs. Simply Financially Free

    I love the oversimplified chart! Although our savings rate is not up to 50% we are pretty much in the Goldilocks zone.

    And a great reminder that change and progress take time and retraining. The journey to financial independence is just that, a journey, that takes time for the changes to really make a big long term difference.

  7. Mr Zombie


    Exactly 🙂 It's not an instant path to FI, it takes time. So far all the changes I've made have been overwhelmingly positive, and from more than just a NW point of view.

    Thanks for stopping by.


  8. Mortimer

    I love this matrix. It's so simple, yet explains so much! Can't wait to learn more about your journey toward financial independence. Keep pumping out analytics like this and I daresay it won't take you long!

  9. Kurt

    I'm pleased to observe that my wife and I are securely in the Goldilocks zone. And your description is right on–"The might be viewed as cheap by other groups, or perhaps hiding some sinister secret that is a black hole for money, but it is their habits that are helping to build a powerful collection of assets that will soon support Financially Independent life." We generally don't let on to friends the details of our financial position because we've observed the 'sinister secret' effect you note. As best I know, only two people besides us know our net worth. And when people make reference to our mortgage payment, we never bother to let them know what we paid off our mortgage more than a decade ago. 🙂

  10. Giovina

    I love this analysis. I'm somewhere between frugal by nature and goldilocks, and I'm just at the beginning of my career so I hope to earn more as the years go by and retire early. My savings rate is around 30-40% and I'm making an average income, and I plan to roll any raises into my savings instead of inflating my lifestyle any more, since I live comfortably with a few affordable luxuries. I wouldn't want to eat less healthy or give up activities I enjoy just to squeeze a few more pennies out of my budget, so it seems more worthwhile to find ways of increasing my income.

  11. Mr Zombie

    Good work Kurt!

    I find myself 'playing along' sometimes as well, it's sometimes easier than the hassle that comes with explaining everything.

    Must be an amazing feeling have paid off the mortgage over a decade ago! 🙂


  12. Mr Zombie

    Hi Giovana,

    That's what I did, saved any payrises I got and found my savings rate increasing organically.

    You're completely right, your savings rate shouldn't rule your life. I still spend more than I could if I stripped back to the bare minimum…but I enjoy cycling and the odd beer 🙂


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