It’s Not What You Make, It’s What You Keep

“The greatest wealth is to live content with little.” – Plato

No matter your goals or outlook, the fact is life costs money. In many cultures, finance is a very personal topic. However, shying away from open discussion can lead to a lack of pragmatic financial education. It’s easy to default into the simplest of modes: money is coming in so I can continue to spend it. But the reality is, life is always going to throw surprises your way. Finally hacking down that debt? Surprise, your vehicle requires major maintenance. Hit your savings goal? You’re a victim of a round of layoffs. Running through such scenarios is not a fear tactic to induce anxiety, but rather a necessary reminder — life is full of chaotic chance and it’s never a bad thing to be prepared.

How is your financial health? Are you taking advantage of long-term investment options? Are you tackling your debt? These should be quarterly check-in questions for yourself. A celebratory spending spree can be enticing after that first job or big pay raise. Bigger paychecks turn into bigger TVs, new cars, expensive jewelry, etc. The goal is not to demonize any and all spending, but to ensure it is part of the plan. For instance, what would the result be if you took the money for the bigger TV and placed it in investment options? Then what would that look like in five years? Ten years? Thirty years? Another approach is to ask yourself: will this purchase negatively effect my savings goals?

Obviously, every budget is different. Financial situations are personal and can vary vastly based on multiple factors. The object is to be aware of these factors, develop a plan, then stick to it. Building out life targets for savings not only requires budget planning, but having knowledge of what options exist to help build wealth. For example, understanding compound interest and using it to your advantage. Budget goals are essential because having no targets to aim at will always result in missing them.

Action: Review (or create) your budget plan and compare it to your spending habits over the last three months. How are you doing against your budget? What can be modified to do better? This can be done while embracing hygge.

Further Reading:

How to Make a Monthly Budget

Understanding Compound Interest