Unlocking the Golden Handcuffs

How much money is enough money? Or is there never enough money? At the start of the year, when salary increases kick in, bonuses get paid and taxes come due, everyone inevitably takes a step back to revisit their financial situation and the usual conclusion is “I/we need more.” But did you know that if you make 6-figures, you make more money than 81%* of all Americans?! Why is that not enough then? Why are most of us unhappy with our financial situation and seeking more? Is there a number (one that is reasonable and realistic) that we can affirmatively set as being “enough”? 

Worries about finances are one of the leading causes of mental stress, career anxiety and a variety of social issues (including marital conflict). While this is understandable for families making less than $100K per year, something is not adding up when these concerns come from professionals making the type of money we make. Unfortunately, there is a major gap in financial literacy and even the most educated of us hardly receive any education on personal finances. The harsh reality is that it is hard to make things add up if you don’t ever sit down and try to actually add up the numbers. If you never sit down and make a FAMILY BUDGET, it’s a near certainty that you’ll never have enough. And if you’re always searching for more money, you’ll miss out on searching for happiness because as we all know money can buy you objects and experiences, but it cannot buy you happiness. A budget is a simplified way of ensuring that the bottom layers in our pyramid of needs (credit: Maslow) are strong so that we can focus on building the top of the structure, culminating in self-actualization.

So how do you make a budget? Where do you start? I am in no way a financial advisor or a financial professional but I’d like to share our simple Family Budget Template that we’ve been using since we started earning in case it’s helpful to anyone else. Avni and I sit down at the start of each year and go through a pretty simple process. We take our first paystub of the year, multiply our net pay (i.e. post-tax amount) by 24 (assuming bi-monthly payroll), and begin the allocation. We’ve kept our budget categories relatively general to streamline the process. There is only one VERY IMPORTANT RULE that we have committed to: the expenses portion of our budget should not exceed the post-tax salary we made when I first started my career. This is our key to unlock the golden handcuffs. Sure, we may make special one-time expenses if our savings adds up, but the annual budget CANNOT exceed that number.

Yes, this is hard. It requires sacrifices and we have to make choices. We cannot have all the things people around us have. But at the same time, let's be real - we already have a lot and if what we have is not enough to make us happy, no amount of things will ever make us happy. Happiness is an outlook rooted in gratitude. Until we learn to be grateful and content with what we have, we won't be happy. Developing that outlook requires time. The more time you spend working to chase money, the less time you will spend enjoying the experiences that help us develop the outlook we need to truly be happy. And to reduce the time we spend working, we need to live within our means.

Many of us grew up with very little and are making more than our parents ever did. The fact that we’re now here and constantly wanting more is a spiritual and psychological problem. There is absolutely nothing wrong with enjoying whatever you have, but living your whole life chasing after something materialistic is not a healthy way to live. If we continue perpetuating this feeling of “not enough” and pass it on to the next generation, we’ll have greatly failed our kids. So my humble challenge to you: start out the year by making your family budget and then stick to it! If you end up with a bonus or an unexpected pay raise, put that money towards something meaningful that will positively impact your life in a way you’ll remember forever – don’t just let your expenses balloon!

If you want to talk more about making a budget and tracking it, feel free to reach out. The template I've shared includes monthly tabs where you can import your transaction history from your credit cards and then actually track how you're doing against your budget. Simply creating a budget is useless if you don't actually ensure you're staying within it! There are fancy apps and ways to automate a lot of this but I still enjoy the good old manual method. It forces me to review our transactions as well and make sure we're not getting charged for things that I am unaware of.

DISCLAIMER: THIS POST IS IN NO WAY INTENDED TO BE PROFESSIONAL ADVICE. I AM NOT A FINANCIAL PROFESSIONAL AND I AM SIMPLY SHARING MY EXPERIENCE. PLEASE SEEK PROFESSIONAL ADVICE BEFORE MAKING ANY DECISIONS.

* https://dqydj.com/average-median-top-individual-income-percentiles/