It's Not Your Income, It's You


Some of us have financial issues because we live in an expensive city where it is nearly impossible to find comfort without splitting the bill between roommates. Others never learned money management, be it from their parents(s) or through educating themselves. And some people just don't have the discipline to manage where their money should go versus where it actually does.

I used to hate money. Up until three years ago my mindset made me spend it as soon as it hit my bank account. I paid my bills and took care of other responsibilities but life had fun opportunities "now" that needed my attention. 

Live fast, die young, and never be a prisoner to a bank account.

Having $.40 felt more freeing than having $400. It's been easy to have that mindset since I didn't have to take care of anyone but myself. For the short period of time when I had a dog, I had to be more mindful of my spending. That mindfulness didn't come until one week where I spent all my money on liquor and food, came home and forgot to get dog food. I had to find some loose bills around my apartment and get cheap canned food from the market for her. I'm a bad parent. 

The realization of that moment and my selfishness made me feel bad, especially since the food didn't settle too well in her stomach. I don't have any new pets, and I still only have myself to take care of but the awareness of how quickly my insignificant needs go out the door when I'm responsible for another life has stayed with me. 

Giving her away was the last thing I did before I started my unique life journey and at the moment I better understood the importance of a dollar on three levels: spending, saving, and investing. The Universe worked its magic for me when I was on that journey. Although I had steady money coming in, the bills I had ignored became debt (OK I lied about paying all my bills) and other financial obligations came back to haunt me. 

As one financial door closed for me, another opened at exactly at the right time allowing me to pay my rent, bills, debt, and have money for my own mild enjoyment. Every new bill and every new form of earned income fit exactly into what I needed to get by. If I needed $50 by Thursday, on Wednesday I'd have $50 available to me from work I'd done; no more no less. The Universe was looking out and teaching me a lesson and at no point was I upset with my financial situation. I took what was given to me and I spent as needed, saved what was important, and invested what I could risk to yield a better result down the line. 

"If I Was Kanye, I Wouldn't Have These Problems. But Then I'd Have Kanye's Problems."

I imagine if most people were making the same income they do currently, and lived 50 years ago, they'd still have financial burdens. There is a reality where people just can't afford to live in certain places, but there is another aspect where people are living check to check due to poor financial decisions. You don't have to be broke; you choose it with every swipe, chip insert, and "Submit Order" button.

A dollar in 1970 equates to $6.72 currently. Let's imagine you make $40k a year currently and lets give you that $40k to live during the 70's. Forty thousand dollars in the 70's equates to $250,954.91 in 2017. So jump back to the present and imagine you have $250k salary currently. What would you do with it? Most likely move into a better place, get a (better) car, put your kid(s) in private school, give more money to family and friends, and a bunch of other things. You're spending but not in relation to your $40k salary, you spend with the new $250k salary in mind. A Honda becomes a BMW, giving $100 to a friend becomes $1,000, you have a larger space so your rent increases, Old Navy becomes Bloomingdale's, KeyFood becomes Whole Foods, and on and on.

Your spending would increase to match your income; simply because we tend to live and make financial decisions based on our income. Even saving becomes different because now you can afford to save more and send your child to NYU versus Hunter College. More spending, same relative saving, and still no investing. The end result is you still have nothing to show for your spending long-term.

Tax Man

Whenever I do my taxes, I looks back at how much money I've made in the previous year and I reflect on my life and where my money has gone. I started my taxes today and I by circumstance I also needed to get a new social security card. I went on the site and took a look at how much money I would get if I retired now (always on my mind). I then looked at my yearly income since I started working in 2004 and realized the more money I had made, the more I was inclined to spend. I can easily remember where all my money went in 2011 and 2016. Comparing the two years, although 2011 had more income, I had nothing to show for it. In 2011, where I had less income than 2016, I've made more progress, better financial decisions, and more investments. It's difficult because my innate behavior is to spend until I see $.40 in my account and wonder how many days it will last until a random bill comes and hits me with an overdraft fee. I used to take pride in having $.40 in my checking account for three days. Why?

Live Fast, Die Young

You can't spend what you don't have. But you shouldn't spend what you do. In Rid Yourself of Excess I wrote about looking to minimize the things in your life that are unimportant. This included minimizing spending on meaningless monthly subscriptions (I used to pay for Spotify. I can take that $9.99 a month, and invest it into a simple portfolio, over 12 months it becomes $119.88 + whatever my investment yields. I can also get rid of other services, invest that same money, ignore them for a few years and let something happen that'll benefit me long term). Think about all the athletes and entertainers that become millionaires but go broke because they don't know how to manage their money. If you don't know how to manage $40k a year, giving you $250k doesn't solve your financial problem, it just gives you more money to throw away.

I've been broke, living check to check, and lived comfortably and I've been well off financially but struggled with getting the right things done. I used to spend often because tomorrow isn't promised and I don't want to limit myself in anything. But when I realized tomorrow kept coming I knew I had to learn to be better than the things that require me to swipe, insert a chip, or click "Submit Order."

You're better than all of the things you buy. Educate yourself on finances whether you're single, a bad pet dad like I was, or married with kids.