Budgeting – Valuable at All Income Levels

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One of our founding fathers, Benjamin Franklin, is famously quoted as declaring, “A penny saved is a penny earned.” In a world driven by marketing and extreme consumerism, many Americans have bought into the lie that having more “stuff” will bring happiness. The newest iPhone, the coolest jeans, tailor-fit brand-name suits and the trendiest shoes are all ways we can imply our status level to the world. Everyone wants to be viewed as successful, and unfortunately, the “fake it until you make it” mentality is causing many to overspend and neglect their savings.

The key to beating the global marketing machine’s ability to convince us that we need to buy something is by starting to save 10% of what you make … when you’re young. For someone in their early 20s, budgeting often focuses around being able to pay your bills and stretching that paycheck as far as it can go to live a “fun” life. Saving money through budgeting is a habit and skill set that takes diligence, and discipline. If you are able to master the ability to live within your means and to, as Oprah Winfrey says, “pay yourself first,” you will live a life of stability and eliminate the need to rely on anyone or be forced to stay in an unhealthy employment situation. I encourage younger MCM readers to look into the amazing budgeting tools out there. The Mint mobile app allows you to track your spending and savings for free! Starting younger is going to put you far ahead of your peers in your older years.

Later in life, 40s plus, even when we’ve used our budgeting mindset to create extra savings (margin), it is still advantageous to live within a budget. Just because you now have the money and the income to spend, doesn’t mean that you need to. In fact, these later working years are often the years that will either make or break your retirement. At this point, budgeting for higher-income earners is not about “if” you can afford certain things, it’s about assigning value to what we consume before we are tempted to consume it. It may be time to utilize some of those hard-earned savings to purchase the diamond earrings your spouse has always wanted, or possibly surprise your husband with a golf getaway weekend in Cabo. These are great ways to enjoy what your prudent budgeting and savings from your youth have made possible. In these situations, the key is to ensure that you assign a monetary value to those expenditures beforehand. Often, we end up overspending on these luxuries if we haven’t already established limits. You can buy beautiful diamond earrings for $1,500 or $5,000 and guess what? She’s gonna be thrilled with the gesture of love and thoughtfulness, not the pricetag. Whether or not you have the money available isn’t the question; the question is whether we are placing the appropriate value on the object at hand. Having limitations in place, even when you have the money, is a sure-fire way to ensure that you keep on having the money.

Living within your means is often looked at as a negative or boring existence. From people who make $12.50 an hour to those who make $1,250 an hour, the only way to make sure that you continue to create margin in your life and keep your savings and independence growing is to work through a family budget and stick to it. Deciding not to purchase things is just as empowering as purchasing them. The feeling you get from opening up that bank statement and seeing your savings account continue to increase is more valuable than anything money could have purchased.

A penny saved IS truly a penny earned.

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