The infamous question: “Are you making any money?” While you may have heard this potentially abrasive question in an episode on Shark Tank, read it in a financial book somewhere or watched it in a movie about Wall Street, there is a valuable lesson to be had here. What exactly does this phrase mean? I’ll walk you through my view.
When people ask you this question, the first inclination or tendency most people have (for the record I too fall into this trap quite often) is to talk about the revenue or in the case of our own personal finances, salary/income. While I agree that income (salary) can be an important factor, I would also argue that costs are the most overlooked items by most people. How do I accumulate wealth? Some would argue to continue focusing on making more money and that therefore costs will not be an issue. The more you make, the more you earn……right? Not necessarily. I’ll show you how that can be a misnomer.
Using the example above, let’s assume you solely focus on your salary/revenues, rather than your costs. In theory, as you make more money at work, you would see that translate into real dollars in your pocket. This would remain true only if you keep the costs of your lifestyle maintained as you were paid more. What would happen though, if your lifestyle were to change with each promotion? What if a new title and increased paycheck equated to a larger apartment or home, a newer or more expensive car, a closet full of designer clothing; the list could go on. The reality of this hypothetical scenario is that as your salary is increasing, so too are your costs. The dollar that was paid to you may suddenly be going out the door to pay for an expensive new addition to your life, rather than heading straight to your bank account. The moral of the story? Try living within your means as this will provide you with abundance! 🙂
Now I’ll be the first to say I am not perfect; in truth nobody is. There are times where I see something that I really want and end up buying it. While this is not the end of the world, if I were to really look at what I was thinking of buying and evaluate whether or not I truly needed it, I like to think I would be making a better decision. In my view, awareness is the first step toward making an informed decision, especially when it comes to your own personal finances. I also want to be careful here and not seem like I am preaching for everyone to live a spartan lifestyle. Everyone lives their own life as they see fit and I am in no place to tell you how to live yours. Instead, what I invite you to do is to try and be conscious of the decisions that you are making as you spend money. My goal is to help you bring conscious thought to your every day life!
To reiterate, I do not want you fretting and worrying over every single purchase that you make; that is not constructive or helpful for anyone. Instead, I implore you to get motivated and excited by the idea of aligning your lifestyle into something that may move you closer toward financial freedom. For some readers, you are well on your way and already do what works for you! Great! Keep doing what resonates with you!
My motivation for this post, and honestly this blog, is to help; to bring some light to an area that most people either do not like talking about or an area that seems too daunting to focus on. My advice? Create a budget. Get a clear picture on what is coming in the door and what is going out the door. Start there and see where that takes you. Remember, every great journey begins with the first step! 🙂