Many personal finance bloggers are broadly split into two camps: one side focuses on the perks of ”earning more,” and the other side emphasize the freedom of ”spending less.” I’ve been thinking about how these philosophies apply to my personal finances, and how I can calibrate my goals and efforts to achieve what I want out of money.
Well, what DO I want out of money?
For someone who thinks a lot about her personal finances, the reason why I think about my finances is because I don’t want to worry about money. That’s my biggest personal finance driver – to be able to just not worry about money. I can’t quite articulate what exactly “not worrying about money” means, but I do know I am happiest when I can enjoy most of the splurges I want and still be putting away over 50% of gross income. That will satisfy both the shopper and the saver in me!
Control wants + increase income = no more money worries.
There are two methods that I am employing, in tandem, to achieving my goal of “not worrying about money”:
- to control/moderate “wants”, and
- to increase resources
Both are important because I like beautiful things and delicious things and convenient things and enjoyable things, and those things, on the whole, cost more. So then it becomes a matter of setting an internal benchmark, if you will, on my definition of “luxury” or “beautiful” or “convenient.” This means that I know I will be much more easily satisfied (and at lower cost to my finances) if the handbag I want is a $300 tote from J.Crew instead of a $2,000 bag from Celine, or if my dream house is a 3-bedroom bungalow instead of a stately mansion. In short, I am careful to control not only my lifestyle inflation (what I buy) but also my aspirational inflation (what I want to buy).
On the second part, is that I want to be able to enjoy these nice things and still save and invest for my financial security. And the only way to do that is to increase my resources. Hence, coming back to school. Hence, working hard to find a job that I enjoy and learn, but that provides a good compensation.