There’s a reason why so many pro athletes are left with nothing merely five years after their playing careers have come to an end.
There’s a reason why so many American’s find themselves in deep in debt.
We can’t seem to handle change very well and we can’t, for the most part, throttle back our spending.
Knowing When to Spend and When to Save
We should always be saving money, no matter mow much or how little we are making. But aside from normal savings accounts, could you resist the urge to spend hog wild even if you came into some extra money?
I had a close friend who was living on the edge of drowning in debt. Then, out of nowhere, his commission-based work picked up and he started earning literally quadruple his normal income.
This increase in income lasted about 26 months. Sadly, he didn’t put anything into savings, and he didn’t pay down a dollar of his debt.
Instead, he spent it all – such a waste. His two years of prosperity were over as quickly as they arrived, and there was nothing left to show for it.
We’re too quick to increase our spending when our income grows, and we’re too slow to decrease our spending when our income lessens. It’s a prescription for financial disaster.
Scaling Back and Ratcheting Up
Look, I’m not suggesting that you live like a miser, always counting your money without spending a dime. But being reasonable and careful when it comes to spending will help you keep more of your money.
A good starting point is to make sure that you’re living in reality. We’re not all celebrities, we can’t all afford luxury, but we can all live responsibly.
One of the reasons that I love short-term and long-term financial goals is that they help hold me accountable to my financial future. So when I come into some extra cash, whether it’s earned or won, I know what needs to happen before I spend it all.
We all have our week moments. But it’s important that we have enough, or develop enough, responsibility to make sure our week moments don’t turn into weeks, months, or years.