Good morning Dinks. It seems like everywhere I turn I hear about “proper” money management and every news caster or reporter wants to tell us how to “properly” spend our pay check. Every time I see an article about how to manage my money I think to myself – how can someone else tell me how to manage my own money?
Money is personal, so let’s talk about it
As a former spend-a-holic and a former girl who was drowning in debt I appreciate the fact that someone is trying to help me learn how to spend my money, but as a financial planner I have to say that there is not one money management rule that applies to everyone. Why is that? It’s because money is a part of personal finance, meaning it’s personal. How much you spend depends on how much you make and where you spend your money depends on your financial priorities – and these are all different for everyone. That’s why there is not one perfect one size fits all answer to money management.
If you are finding yourself in the red at the end of each month I would love to help you out and tell you how to spend your money, but I can’t. All I can say is that if you live within your means you will always have money.
We don’t have any secrets here
I once had a client ask me, what does that mean to live within my means mean? Well, that question I can definitely answer. Living within our means means that we spend less money than we make. How do we do that? We set financial priorities. Some people say that we should spend 25% of our after tax income on housing and 10% of our after tax income on transportation, but I choose to live in a city center and therefore I don’t have any transportation costs because I walk everywhere. I feel that if it’s not in my neighborhood then I don’t need it and this lets me spend a little more of my pay check on housing, for the convenience of it.
How to set financial priorities
After I decided to stop overspending I stopped accumulating debt. This was a huge change for me because not only did I start spending less money each month, I had to cut out a lot of my favorite things because now I had to include a debt payment into my monthly spending.
Now I live by the rule that my housing is my focus and food is my second priority. Nothing else really matters. If I don’t need it to stay warm, keep full or be clean then I really don’t need it. Sometimes I treat myself to personal items, but I have come to learn that I really don’t need a lot of stuff to be happy. I save my money instead of spending it to try and buy my personal happiness.
I know this is going to sound crazy but although I am living on less I don’t actually feel like I am missing out on anything. This is probably because I am happier living without the stress of being in debt.
Photo by dullhunk
Kristina Tahnyak
Tahnya is a Certified Financial Planner and former Investment Advisor turned marketing and communications professional She holds a degree from Concordia University, is debt free and currently works in the field of digital marketing.
It is hard to live within your means without doing a lot of sacrifices. I believe the reason why a lot of people find it hard to do is because the income is not equal to expenses, no matter how thrifty they are.
It’s quite easy to tell others how to spend (or not spend) their money. Our government, for instance, thinks it can handle our money for us much better than we can. I read quite a while back that one senator felt that everyone’s paycheck should be sent to the government in full, then the government would return an allowance to the individual. Everyone would get the same whether they were doctors or ditch diggers, because after all, they couldn’t discriminate against anyone by giving them more. A scary thought but with our country running such high deficits, I expect it to someday be proposed.
I totally agree about how one-size fits all personal finance recommendations don’t work. I feel like that might be why so many personal finance blogs can flourish at one time – because somewhere, out there, is a person similar to you, a few steps ahead of you in the financial game – and if you’re lucky, they’re blogging about how they got there… and it’s really interesting to read about people completely different from your own habits too.