Money affects everything.
It affects where we live, what we eat, how we dress and what we do with our free time. It affects what we can give back to our community. What you spend in one area directly affects how much you have left to spend in the other areas of your life. But more than that, it affects the very quality of your life in so many ways.
At The Savvy Life, we look at how spending habits affect your Home, Food, Wardrobe, Travel and Entertainment because in our experience of working with clients, we find that these are the areas where people most often overspend, but with the least amount of satisfaction. With that in mind, the key is to:
- Prioritize what is important to you so you can properly focus your spending to meet your goals and
- Spend with purpose everywhere, getting the most satisfaction for that money.
But, there are other, more subtle ways that money affects everything in our lives.
There is the psychological effect that comes from how you view money. If you know where you stand financially, on a daily basis, and you have a plan for living within you means, you have the confidence to live your life, knowing you are making good choices and that you are ready for most of the mundane challenges life throws at you.
If you are living paycheck to paycheck, always scrambling to pay your bills on time, there is a stress level that clearly affects your quality of life.
These two points of view are independent of income level.
We have clients who earn less than $35,000/year but, have their plan in place and their spending under control. They are working towards their goals and know they are on the right track. We’ve had clients with incomes over $1 million/year who are panicking because they don’t know how they are going to pay their mortgage next month. It isn’t just the quantity of money that has the effect; it is how you use and think about the money you have that determines how it affects you.
Having a goal, a plan to achieve that goal and tools to help you spend less than you make all work together to make money’s effect on you constructive.
Money also affects how we think about opportunity.
If we have certainty about how we stand financially, even if it is not where we want to be today, we can see a path to get to where we want to be and to take advantage of the opportunities in front of us. If we don’t understand our financial health, then we automatically think the opportunities in front of us will never be attainable. We think “Oh, I can never afford that vacation or new car, or home remodel.” If we are living in a debt cycle, charging credit cards and carrying balances, that may likely be the case. Servicing debt every month saps our opportunities. That $200, $500 or $2,500 that we send out every month is paying for past experiences, not new opportunities. Seeing that money go out, with nothing to show for it, can be demoralizing. That is why we work with clients to craft spending plans that burn down that debt, so the money they were sending out in payments can be used for the future instead of the past.
So, when you think about money, look at it in all the ways it affects your life, not just what your bank statement shows every month. Money touches all aspects of how we live, how we think, how we feel and how we dream. By having clear goals, a plan and spending less than you make, you can control it rather than it controlling you.
Kevin Gibbons is the Chief Operating Officer of The Savvy Life and co-author of the international bestseller Living The Savvy Life. For the past eight years, Kevin and Savvy Life Founder Melissa Tosetti have worked with over 450 individuals and families to create Spending Plans.
They also work with financial advisors and their clients doing cash flow planning as well as giving Savvy Living presentations via webinar and in-person to audiences across the U.S.
If you’d like to learn more about how Kevin and Melissa work with clients, visit The Savvy Life’s Programs page.
If you’d like to learn more about how they work with financial advisors and their clients visit: The Savvy Life Advisor’s Page