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Salary vs Lifestyle
When we get paid, it feels like a shotgun goes off in most of our minds.
Our thoughts are flooded with the joy of receiving that income, but balanced by the responsibility of ensuring that we utilize this hard-earned money to meet our specific needs and wants.
Importantly though, before we set off in any particular direction, some reflection and re-evaluation merits our consideration — especially in these austere economic times.
Reflecting on our income and our lifestyle raises a few fundamental questions: Am I living within my means? What are my most essential needs? Am I consciously separating my needs from my wants? Let’s take a look.
Needs vs. Wants
As working individuals, most of us know, or should know, what our needs are.
They are the essentials we cannot go without on a daily basis.
Food, clothing, shelter - and the direct expenses associated with such - will always be basic human needs.
Realistically, our needs don’t change.
Our wants however, are usually the area that we either overstate, overspend on, or confuse as being needs.
Wants, to oversimplify, are the opposite of needs - they are the discretionary items in our lives.
So for example, we need footwear.
But we want those expensive shoes.
It is in these areas of life that we must ask ourselves: ‘Do I really need this?’ or ‘Can I comfortably afford it without compromising my needs?’
‘Are those brand name shoes and spa days necessary or can I survive without them?’
Living beyond payday therefore means taking a sober look at how we deal with our income based on consciously reviewing our needs and wants.
As the old adage goes, “you can’t have champagne taste and mauby money”
That’s a recipe for ruining your personal finances.
Understanding our needs and wants and separating them is the first step in reflection and re-evaluation.
It follows naturally that our lifestyle should be in line with our income position.
We should always seek to “Cut our suit to fit our cloth.”
Put differently, our spending should be in line with - or below - our income.
For example, if we have debts, (what we owe) they should be such that we can comfortably afford to service them without any major disruptions to our existence.
Additionally, before we spend, we should make every attempt to “pay ourselves first”. That is, we should always ensure that some part of our income is saved.
The amount we save is less important most times than the act of doing it – given the competing financial demands of life, it takes real effort and discipline to save!
Life is unpredictable and living beyond payday means putting something aside to cater for this unpredictability.
As social creatures, social spending will always be a part of life.
For most of us, after we’re paid, we like to hang out with friends, hit the club, check out that new restaurant, go see the latest movie and get the hair and nails done.
While we all need some ‘me time’ and pampering, we need to consider the extent to which our spending in this area affects our financial future or is harmful to the life goals we set.
None of these activities are bad in themselves, but the key is to ensure that as a proportion of our income, they are prudently managed.
Anytime we find social spending is consuming so much of our salary that it becomes difficult to make it to the end of the month, and we get that overwhelming feeling of ‘living pay cheque to pay cheque’, we must indeed reflect and re-evaluate.
For most of us, our income is fixed.
Therefore, adjusting our lifestyle to match our income is critical to surviving beyond payday.
Above is a worktable designed to help us evaluate our needs vs our wants
Be as detailed and honest as possible while filling it in and examine whether any lifestyle adjustments or spending habit changes are necessary.
Coming next week….
Lifehacks for Saving!
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