Speaking with high earners about the paycheck not being enough always turns into an satisfying chat. Even though the reasons are usually common (you just don’t know my situation being the most popular), we always end up with a good resolution. Why? Because no excuse passes the “the average income per household in 2007 was $50,233″ test (source: US Census Bureau).
Why can so many families live below $50,000 a year while others earning 4 times in the same country still feel poor? If you are wondering the answer to this question yourself, or if you feel like the paycheck is never enough, here are 5 suggestions for you:
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Comparing Yourself to Others
A lady who got a windfall of $10 million (after taxes) in an interview with CNBC admitted that she felt poor! The reason was simple – she was comparing herself to the super rich. While she had $10 million dollars, she was wondering why she couldn’t buy that $45 million dollar loft overlooking Central Park in Manhattan. She wanted everything, so it made sense that she was disappointed!
As soon as you reach the top of a mountain, you will see that there are other mountains that are higher! In fact, some mountains will seem higher even if they are not! Stop comparing yourself to others!
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Jumping Your Lifestyle Ahead of Schedule
Affordability is different for people earning $10k, $50k, $100k, $250k, $1 million, $50 million and so on a year. If your salary is $50k annually but you try to live the $100k lifestyle, your paycheck will never be enough! If you want to get ahead, the opposite (living the $50k lifestyle even if you are earning $100k) is more appropriate!
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Measure What You Have and not What is Missing
I have a espresso machine that pours a set amount of water into the cup. One day, I used a huge mug and it seemed like there was no coffee in there! The coffee obviously didn’t change, but the container (our expectation) did. It seems obvious that the only way to measure how much we have is by looking at the actual volume of coffee but like many, I looked at how empty the mug was. Counter-intuitive and counterproductive!
Learn to appreciate what you have accomplished and what you possess, not what you want to get because it’s never enough!
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Periodically Cut Off Your Expenses
I’m not talking about cutting off your unnecessary expenses like you’ve read before but actually anything that is not strictly for survival purposes! Periodically cut off your cell phone or your TV bill for a few weeks and see if you miss it. Coffee habits? Movie Thursdays? Stop them and see what happens! Not only will this force you to relearn what’s really “necessary”, it will help you inject variety into your life!
Obviously, common sense is required here when determining what’s necessary for survival. Taping up the air conditioning panel is so you can’t turn it on might be worth it but cutting the utility bill is not. Carpooling to work with your spouse is good to try but selling your car when you have no means to get to work is not. Use your judgment but stretch the bare minimum and you might be surprise!
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Search for Alternatives
You know what? There is always a less expensive option for everything that we do. With the ease of information gathering brought on by the Internet, there is really no excuses not to spend some time researching to see if you can find a better alternative. Like pasta? Try the store brand spaghetti. Watch movies? Try Redbox. Can’t live without TV? Try HDTV antennas or watching them on the Internet!
Why can’t people live below their means even if they are earning 6 figure salaries? Because they just choose not to.
Start thinking that you can, and begin putting it in action!
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{ 25 comments… read them below or add one }
It’s funny how “enough” never seems to be enough!
6. I’d add, Adjust your attitude. Frugalness is a state of mind. It’s enjoyable to live a very simple lifestyle for those of us who have been doing it for years. It would be a drastic change for others!
Great post, David! It’s amazing to me that anyone making good money feels poor – after all, it’s the lifestyle they are trying to live that makes them poor, not their paycheck. Good stuff…
It is also worth going ‘cold turkey’ – living on the bare minimum disposable income for 1 week (I suggest £25 or approx $50). Use this to cover transportation, food and recreation.
While you are making your own lunch, catching the bus (much cheaper than the train) and spending saturday night in to watch TV (cheap), remember there are people on low incomes who live in this way.
After that 1 week then you will feel positivley wealthy!!
well after a divorce and getting laid off, my income is not enough.
Wow! The coffee cup example was powerful.
I made a mistake a long time ago when I jumped ahead of my income. The debt I took on stressed me out so that I made a pledge to myself to never to such a thing again.
marci: Great 6th point! Attitude should be #1 actually. During the last few years, I started to understand what a difference attitude can make. It can really “make or break” you.
Natasha: Those are great suggestions. Whichever you do (either the frugal way or the wasteful way) will become your routine and you won’t think about it much.
Rick: Sorry to hear. Hopefully you already have an emergency fund setup and is well on your way to finding a great job!
vilkri: Sometimes the most powerful lessons are learned with mistakes and I’m glad you learned from yours!
Great article! I love hearing the “you don’t know my situation” excuse.
I agree with you that you have to put a positive spin on it and look at what you have, not what you don’t have. You are never going to be satisfied if you look at what you don’t have, cause the “wants” are endless. It’s better to live with or below your means so you can be prepared for emergencies, or just have more for when you do feel like splurging.
Great post. I like your coffee cup analogy. Marketers use that against us when they give us those giant grocery carts in the store. Looks like we have nothing in our cart and so we put more in. Same principle!
Great Post! I do live below my means by choice. I love finding new ways to be frugal and just spending time with the people I love.
Really liked the post. It’s so true.
It’s easy to live a bare bones budget for up to a year if you have an exciting goal saving for a great vacation or for a return to school. But difficult for the longer term goals. But cutting back for a few weeks at a time should prove very doable and interesting. Thanks for the idea!!
Craig: Having money saved up is definitely about freedom. I really hope that everyone will just start having one already!!
SimplyForties: That’s gotta be why Home Depot has those huge carts when anything big from there doesn’t fit anyway!!
Bobbi: I increasingly find that spending time with people I love is much more than making as much money as I can!
Jane: Let me know how you do with periodically cutting your expenses! Maybe you will find that you don’t miss half of those habits!
It’s because no matter how much wealth people acquire they still don’t know how to manage money. So, it doesn’t really matter if they make $20k, $50k, or $100k a year.
I work with people who complain about not having enough cash for new shoes, but drink their money every weekend. : p
PennySeeds: Drinking is another one that I really don’t get. Every weekend, there’s some gathering and everyone gets drunk and spends $20, $30 outside just to get a hang over the next day!
Drinking and Smoking! Who can afford those habits (or even more illicit ones?)
You see it the most in the more Blue Collar workers – the ones who are already barely making anything! To me those are a waste of money…I know there are negative health benefits too obviously, but more importantly to me is the fact that I do not want to be addicted – to be a slave to — habits like this that just suck the money out of my pockets faster than I can earn it. There have been too many people that I have worked with that constantly complain about not having money for something–even their kids Christmas– but still continue to buy their cigarettes by the carton every week! I see it as they are choosing to spend their money that way…cigarettes over whatever else…so stop complaining. I could never justify to myself spending $$ on an addiction therefore I do not have any! I am way to cheap!! Frugal, that is.
Very true! I knew a lot of people (especially while I was in the military) who constantly lived beyond their means and often complained about it. Many were young single males who wanted to have everything at once – the car, the stereo, gaming system, big screen tv, etc. I saw a lot of young people get into financial trouble.
aj: It’s great that you don’t smoke or drink! Never mind the money but the health benefits too! I totally agree that in the end it’s just a matter of choice how everyone spends their money. There’s no reason why someone can live off $1,000 a month while another needs $4,000!
Patrick: I’m so glad you aren’t one of them, otherwise I would not have known you since you won’t blog about money!
I think everybody is somewhat guilty of this at one time or another. I know that I am. I started off after college making $26,000 per year, and at various points have thought ‘how great things would be if I could just make xx’. Well, I’ve hit those goals many different times, but instead of being satisified, you move on to the next goal. I think, in a lot of ways, keeping a healthy dose of this attitude is good, because it keeps you motivated. But, you can’t let it consume you. Good post!
Blue Collars smoke and drink. Yes, yes they do. but at least they WORK for their money to do so, otherwise they would not be labeled *bluecollars*. The white collars look down upon such people while in the same breath calling upon this same set of folks anytime their air conditioners, autos/suv’s, plumbing, satellite dishes, phones, etc. go out. Funny thing is, I personally know both sets and hands down the blues most often outflank the whites in terms of common sense and courtesy. I’m a pink color with a blue undertone, meaning that I don’t look down @ the blues while sitting in an office. The other thing I have witnessed is the FACT that a lot of blues make more money than the white collars looking down their noses at them as they repair the lighting or hvac or other needed service so the white collars can do their work.
Smoking and drinking are not appealing to me either, but you are correct in one thing: it is a choice. One that is quickly becoming extinct along with a whole host of other personal freedoms.
When I worked for a concrete company, the “blue collar” truck drivers made much more than us “white collar” office personnel. And that’s just the hourly wage and does not include all the overtime the drivers received.
Great article. The espresso – big cup versus little cup – example was brillant!
A good rule of thumb is to just be blind to at least 10% of your monthly income and stash/invest it. Forget about it, you cannot go back to it. Leave it alone and let it grow!
Good read. Oftentimes people even go as far as to make cash loans just so they can buy their toys in order to not feel “left behind”.