I know I promised this post in video format, however life took over and that just did not happen. I am so sorry and I hope you will not be disappointed!
A few months ago, I surveyed my readers to find out how much money is enough. The response to my survey, proved what countless other personal finance gurus believe – enough money is not determined by a dollar amount, but is determined by your lifestyle and values.
The choices you make in your life determine how much money is enough for you and your family. The main problem is that many people do not understand how their lifestyle affects their wallet. They will dream of one day being about to afford for their spouse to stay home with the kids only to realize after the baby is born that they do not have enough money to afford the one income lifestyle. They will wonder why the family making less than half their income can afford it but they cannot.
The answer is simple – change your lifestyle. You cannot expect to magically afford for your spouse to stay home with the kids if you still live the two-income lifestyle.
Avoid being caught in the “more money you make trap”. “The more money you make the more money you have” claims the trap, however the exact opposite is typically true. The more money you make the more expenses you have.
In my survey, almost every single six-figure household had a $2,000 or more mortgage/rent payment every month. Over half the households with over $60,000 annual income over a $1,000 mortgage/rent payment every month. For those families that are making $50,000 a year or less, their housing payments were under $1,000 a month and some were even under $500! (That is pretty freaking awesome in my book. 🙂 )
This illustrates the trap well; the higher income households all had higher living expenses, not just higher housing costs. I am not suggesting that high-earning families are struggling or that they should sell off everything and move into a 600 square-foot apartment. I am simply providing a visual of how much more the expenses are for those that earn more money. Makes sense, I mean the more money you have to burn, the more money you will probably spend.
Now, here is the dilemma that is faced by thousands of families – the way they spend their money versus their desired lifestyle. The problem is that many families will spend their hard-earned money on things that do not bring them the happiness they are seeking. Instead, they will spend their money on things to appear to have the lifestyle they believe their peers have.
If your housing payment is half of your monthly income and is preventing you from be able to afford the things you love and that bring you happiness, such as family vacations or spontaneous outings with friends, you are spending money that does not fit in with your lifestyle. You may have your dream house, but if you cannot afford much else, you are not spending your money on the true things that bring you happiness. If you are spending hundreds of dollars every month on new clothes and cannot afford much else, you may need to rethink your priorities.
If you have not revised or even set your financial goals or given yourself a budget checkup, now is a great time to review those. The way you spend your money should align with how you desire to live your life. If you want to become a stay-at-home mom but your expenses are eating up too much of your budget, you will probably need to consider how you can adjust those expenses to fit your new one income lifestyle. Similarly, if you get married and transition from a one-income lifestyle to a two-income lifestyle, you will need to readjust your life’s priorities to accommodate your new lifestyle.
Make sure you are spending your money in a way that fits your lifestyle. If you are spending too much on your mortgage or car payment every month, consider finding ways to reduce those costs. A question to ask yourself is, do I want to work so I can afford nice things, or do I want to work to afford to live life to its fullest? I have never seen a U-Haul behind a hearse, you cannot take it with you when die so make sure you are spending your money on the things that truly bring you happiness.
What is one expense you have given up in order to live the life you desire?
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Money controlling you? I know the feeling. My family has been living this real life on a budget for a long time and I can tell you that there's never a perfect season, but with a few changes you can start to reign in your money issues.
Join the 5-Day Challenge today and start getting your money life in order this week!