Spending money increases as you progress in life, and with your demands and expectations outpacing your income, you could soon find it more difficult to keep up financially. The results are bleak? Don't fret.
One way to avoid this spiral of over-spending - or spending money you don't have - 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's how to determine your priorities when it comes to spending money.
1. 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.
2. Pick and choose
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.
3. Avoid draughts
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. Your lifestyle is likely to be hit, and you would be lucky if you even maintain your previous goals in terms of living standards.
Being careful and maintaining a consistent income is the best way. You might be just find if you quit your job and spend six months looking for a new one, but it is not idea. So think twice before taking an action that undermines your financial picture.
4. Build wealth
Think of your money in view of the long term. This of what you want to be in five to 10 years, as well as when and how you will retire. Living at the highest lifestyle now at the expense of the future doesn’t make sense. Use the years of solid income to build a sustainable future.
Talk with your bank or financial advisers about the best investment vehicles for your income and risk tolerance. And don’t forget to account for the changes in your life. Every phase is likely to bring its own financial challenges, so be ready.
By Rania Oteify
