The balance between spending and earning is a precarious balance for most people. While some have the unique blessing of having far more resources than they will ever spend, most engage in the struggle of keeping their spending in line with their income. No matter how much a person earns, he or she is capable of spending more. What is the necessary mindset to bring spending under control and what are the necessary steps required to stop spending more than is earned?
Achieving the proper mindset to bring spending under control begins with an honest assessment of one’s spending habits. This begins with regular necessities such as housing, food, and transportation, but does not stop there. In order to bring spending under control, every spending transaction must be assessed to determine its merit in light of one’s overall financial condition.
Many people make the mistake of trying to live in a manner that is inconsistent with their income level. A young person who has grown up in a household in which the parents have spent many years building up income in order to attain a certain standard of living cannot expect to remain at that level once he or she leaves home and starts a new life.
Beginnings require sacrifice and deferred gratification, two ideas that have lost much meaning in today’s society, and spending often must be curtailed in order to build up an account from which spending can occur. A long-term perspective that connects each spending decisions with a long-range goal is a must if a person’s spending habits are to be brought in line with an appropriate income level.
Spending and standard of life are very personal decisions. Attempting to match the lifestyle of another or copying another person’s spending habits is a sure path to economic ruin. Each individual has a unique income pattern, a unique set of values, and unique goals and so each person must make spending choices that are in line with his or her life goals and not those of another.
The desire to have it all now, while feeding the ego and sense of self-importance, is actually a denial of one’s own personhood. Each individual has value to the extent that he or she lives in accordance with a path that brings the greatest sense of purpose and self-fulfillment in his or her life and which allows that person to make a real contribution to society as a whole. Having merely a consumer mindset robs the individual of those attributes which make that person a contributing member of society and that makes society as a whole worthwhile.
The greatest danger to maintaining a structured budget, one that properly aligns spending and earning, is impulse spending. Spending that is done in response to short-term feelings, whether positive or negative, is always out of alignment with a person’s overall goals. The ability to get something now and to pay for it later is a trap that leads many into an economic hole from which he or she often never recovers. The desire for things must be connected with the willingness to put aside funds toward that purchase. This ensures that spending is representative of a person’s goals and values and that spending is a result of what is actually earned.
The desire to maintain a certain image is strong and the fear of losing face in society is real, but no false image can be maintained forever and ultimately a spending structure that has no relation to one’s income will eventually collapse and the person fall into financial ruin. Impulse spending must be controlled and a smart individual will set aside a small amount of his or her earnings for such purchases, but this must be kept as a small percentage of the whole for it to be maintained.
While the easiest side of the equation to focus on is the spending side, the earning side is also essential if spending is to be kept below earnings. Each person has a career path that ideally will lead to increased earnings over time. An honest assessment of one’s potential in any selected career path is necessary to determine if that path is wise given the financial obligations that exist. Such things as marital status, dependents, desired standard of living, and intent to help others in need all combine to create a demand that must be met with a specific level of income.
These demands often produce the necessary encouragement for a person to attain a higher level of income through attaining greater proficiency in one’s chosen profession and by becoming more valuable to a company. In addition, seeking for other income opportunities and wisely investing the income one does receive are other ways in which income can be generated to offset spending. Creativity and determination are necessary if a person is to continue to maintain and extend his or her income in a manner that keeps that income ahead of spending.
Increased earning must always take place within a strict budgetary environment or it will be a waste. If increased earning continues to result in increased spending then financial disaster will soon follow. A proper budget takes into account not only regular spending demands, but also puts aside income for those unanticipated spending requirements that seem to always come at exactly the wrong time.
It is impossible to anticipate every spending demand and so each person should have a fund set aside just for this purpose. This prevents having to draw from the pool of funds already designated for regular spending requirements and thus throwing the budget process into chaos. Not setting aside funds for unanticipated, but inevitable needs is actually a kind of impulse spending in a different form, but it is no less devastating. In order for the drive to be more creative, more useful in a job situation, and strive for more earning opportunities to remain alive and strong, increased earnings must be seen to have a real impact on one’s overall standard of living. If increased earnings lead merely to more impulse spending then the desire to develop as an individual will quickly dissipate.
Keeping spending under control will always be a challenge. There will always be situations that are unexpected and needs that seem to come from out of nowhere. A structured, analytical approach to spending combined with a strong desire to increase earnings is the best approach to maintaining a financial structure. A long-term mindset that puts one’s overall goals ahead of impulse buying is necessary and the willingness to put every spending decision under the microscope of one’s overall life path is essential if spending is to be brought under control and for a person to spend less than he or she earns.