Do you feel that you are a slave to money? Not to mention the lifestyle that may be dependent on you bringing in a certain amount of it to keep everything afloat?
Before my divorce, I was definitely in this camp. As a young wife and mother, I tried desperately to fit in with the other ‘richer’ mums and their designer lifestyles. The result?
I was miserable and stressed more often than not. I spent a very good portion of my time ruminating over the fact that I couldn’t keep up financially with these other women and trying to think up ways to afford the designer baby/kiddie clothes and accessories. It was crazy. Major credit card debt was never too far from my reality.
I’m pleased to say that I have come a long way since those days. When my husband unexpectedly left me I was forced, quite abruptly, to reassess my financial needs. The good news?
I can now say with confidence that the power, freedom and happiness I now enjoy in life is due largely to this reassessment of what I truly wanted (and did NOT want) to throw my money at.
Before committing to a purchase, I now actually think about how many hours work the purchase is worth. I ask myself if the thing I want is worth two or three or however many hours of my time; if I want the thing so much that I’m willing to sacrifice that time for it. A lot of the time, the answer is a big fat NO. I have no doubt that performing this little exercise puts the ‘thing’ that I want into a much clearer perspective.
I have learned that at the end of the day, it doesn’t matter how much we’re earning or how ‘rich’ we are. If we are not living within our means – ie spending less than what we’re earning – we will most certainly run into strife one way or another. If not major financial strife, then perhaps personal strife as we suffer the stressful effects of trying to live a life that we really can’t afford. And perhaps a life that holds no real meaning to us.
Here are some steps YOU can take to reassess your financial ‘needs’ AND enjoy a greater sense of power and freedom in your life:
Identify what you’re throwing your cash at
WARNING: This step may be a little painful to begin with!
Sit down and create a simple budget. First up, write down the amount of money you have coming in from all sources. Then, write down all of the things that you’re currently spending your money on - look at both your essential expenses (eg. mortgage, rent, utilities, transport costs, groceries and education costs) AND the not-so essential expenses (eg. entertainment, restaurant, beauty and fashion expenses).
Create a separate section on your list for the two outgoing types (essential and non-essential) and be as precise as you can – try not to leave anything out. If it’s something that you spend money on, it needs to be included. You may be unpleasantly surprised to see everything you spend and do in harsh black-and-white, but in order for you to make real changes to your finances - and hence life - it is necessary.
Now, how big is the gap between the incomings and outgoings? Hopefully the former will be significantly more than the latter - if not, you may have a bit of work to do! This is the exact point at which I took stock of my lifestyle, and what I thought I needed in order to live happily and well. Which brings us to the next step.
Identify where you can cut back and downsize
Identify the non-essential expenses that are no longer serving you in any meaningful way, and consider dropping them. Some ideas - subscriptions that you’re no longer getting any benefit from, gym memberships that you’re not taking full advantage of, daily coffees and lunches that can be scrapped in favour of homemade versions. The possibilities here are endless – you are really only limited by your own imagination.
Next up, think of what could possibly be downsized or scaled. Do you really need the designer labels and weekly dinners at the most expensive restaurants in town? Do these things really contribute to you living a meaningful, happy and balanced life? If you’re at a point in your life in which you can afford to buy and do these things and they genuinely make you happy, then go for it.
But if you’re not, and you know that these things are contributing to both your debt and resultant stress levels - give them the chop. It may be the kindest thing you can do for yourself.
Save – don’t spend – any extra cash
Lastly, look at boosting your savings in a simple way by saving (not spending) any extra cash that may come your way. Once you have learned to live within your means, it should be relatively easy to put aside any bonuses or unexpected windfalls - rather than spending them out of habit.
These may include: work bonuses, payrises, inheritances, wins or any other type of cash that you weren’t expecting and therefore don’t need in order to survive. It could also include any extra money you now have as a result of cutting back or downsizing.
I personally try to adapt the attitude that if I could survive without a particular source of money before, it shouldn’t be too hard to survive without it now. I’m not always successful in this particular endeavour - but I always give it a go!
Reassessing your finances and what you think you need in order to be happy and successful needn’t be too painful an exercise. For me, it opened the door to a more meaningful existence as I was forced to look at my life and the way in which I viewed work, money and everything in between. It was truly an eye-opening experience… and one for which I’ll be forever grateful.
How's your relationship with cash? Feel like sharing? Let me know in the comments!
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