Earn more or spend less

Two things

There are  always two things involved when it comes to being more comfortable financially. The good thing here is that the n is 2. The bad thing is that sometimes it is challenging to get either one.

Earning more

When we earn more money, our bottom line increases and we theoretically land in a place where we have more financial leverage provided our expenses did not go up by as much magnitude as our income. So say we get a raise of 1200 dollars per anum. That translates into 100 dollars more per month (if you are paid monthly) or 50 dollars bi-weekly. Now after Uncle Sam has taken his own share, majority of the people end up with about 60% of that money, considering social security tax, medicare and your 401K. So if for some odd reason you decide to increase your monthly expenses by 100 dollars because of a theoretical 100 dollar per month raise, you are indeed hosed! Now you are 40 dollars above budget. If things were to go really really bad and it was a stupid cell phone contract that lasts for 24 months, then you have to be making budget adjustments. So as we start to earn more, we should have the self discipline of not jumping the gun to spend more even beyond what we now earn.

Spending Less

Spending less is pretty much as challenging. If we decide to skimp on that important servicing we should have done, or we buy cheap alternatives of important things like cars, heating furnace or even a mold-ridden home because it is fore-closed, then we will have ourselves to blame when we really have to shell out more money than we bargained for down the road. Spending less means cutting out unnecessary expenses and frivolous spending.

Spend Justly

Spend with justification and justify every spend. Take a few moments to reminisce over what you have just spent your money on. Was it a just spend? Were you doing the right thing in going for the cheaper notoriously unreliable brand? It is important for one to actually stay on the desired half of the field so that we can comfortably say we now earn more or have indeed spent less. That is one sure way to get to a financially comfortable position.

To find out more on how to negotiate for a salary increase, check out this post/video by Ramit

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