Spend some time on your finances
Doesn’t it feel like there is something new every day? Yes, because spending naturally does increase as we progress in life. Gone are the days of just being responsible for your own food and gas, now buying baby’s diapers might appear to be more important — financially — than watching the latest movie for a new parent.
While maintaining an acceptable-to-you lifestyle is necessary, you simply can’t have it all.
These growing demands and expectations can quickly outpace your income, and soon you could find it more difficult to keep up financially. The results are bleak? Financial pressures could lead not only to financial crises but also to failed relationships and illnesses.
One way to avoid this spiral is to simply keep living within your means as a priority. Your lifestyle should match your income and priorities. In many cases, identifying those priorities and budgeting for them can help you stay on track when it is time for spending. Here is what to do step by step.
Pick and choose Avoid dipping into savings Increase your income
Money isn’t everything, but a static income won’t keep up with inflation and growing life requirements. So if you have settled in a job with a mediocre pay, it may be time to look for a better job or even advocating for a pay raise. It is never recommended that you jump from one job to another just to increase your income, but make sure your pay is at least fair. Other ways to increase your income is looking into the yield on your savings and investments, and see if there is any room for improvement. Starting a side gig or taking a part-time job can always bring additional income, especially if generated at a low cost. For example, if a stay-at-home spouse can do a few hours of work from home, this additional income won’t cost much in terms of transportation, child care, etc.
Know what you really want. If you’re starting a family, for example, your spending might be channelled into building this new life. Baby costs, bigger house, and medical bills may be adding a burden to your budget already. This is not a good time to chase lifestyle spending like car upgrades, expensive travel or new major purchases — even if some of your friends or coworkers are able to live at this higher lifestyle.
In this scenario, your priorities are different, and if you focus on what matters to you — that is the must have rather than nice to have — you will be able to maintain a healthy financial life. In addition, be aware that your chosen path might bring new, different challenges, so be prepared for them with a good cushion of savings.
Avoid times when you lean heavily on your investments and savings for ongoing spending. That could happen if you lose your job or you’re hit by a large, unexpected event. That is why think carefully before shaking up your financial resources.
If you occasionally go back to zero savings, you will be starting over more frequently than you need to. The result will be a more fragile situation that leads to higher debts.
Being careful and maintaining a consistent income is the best way. You might be just fine if you quit your job and spend six months looking for a new one, but it is not a great idea. So think twice before taking an action that undermines your financial picture.