Are you living within your means?

They know that financial educators, financial planners, and financial columnists have always emphasized the importance of people living within their means within a solid financial plan so that they can achieve all of their financial, professional, and life goals. Recently, however, the emphasis has shifted to “living below your means” to highlight the need to save for emergencies, anticipated expenses, and a dignified retirement so that you don’t spend all you deserve.

If Americans followed this advice, they would have no credit card debt, sensible and affordable mortgages, sensible or no auto loans, and decent savings, but that would mean they would live the way we did in the 1950s, 1960s, and early 1970s to have. when there were no credit cards, no home equity loans, and only three-year auto loans. It worked then and it still works today.

Recently, however, I received an email from CW, a former colleague and bankruptcy attorney who primarily represented debtors during my tenure. He indicated that he had thought of me after reading a May article in the New York Times about the monthly expenses of six families from different parts of the country.

He reminded me: “I know that we have always differed in where the mistake is, personal responsibility or believer responsibility. Easy credit is just too easy. ”Funny monthly expenses like $ 899 or $ 528 for restaurants, $ 917 for horse stables, horse riding and guitar lessons, $ 769 for pet care, and $ 316 for kids’ activities did not shock me in today’s spending culture, even if you extrapolate it to the year, and it does not go into the question of whether these families could actually “afford” it.

However, CW’s reply was, “Come on, make an effort. Does anyone even try to live within their means ”?

When it comes to living within its means, the federal government has long since forgotten it, except that the Biden government is talking about raising corporate taxes to fund its trillions of dollars in proposed spending programs. It’s weird that a proposed 15% minimum corporate tax, basically a flat rate tax, apparently works for businesses but not for individuals, something we discussed. Also, remember that a trillion dollars is a thousand billion dollars and a billion dollars is a thousand million dollars if you toss all these numbers around.

In the past, I’ve encouraged students and everyone to increase their financial IQ, in part by reaching out to a close friend or family member who is clearly good at their finances and doing everything right. You have sufficient savings; they live within their means; they avoid or minimize debt as much as possible; they have a realistic budget to stick to; they have some smart investments; and they have an overall solid financial plan.

I recently learned that this concept, like so many other things, has been formalized today with so-called savings and accountability groups. Couples or individuals who share common goals – like saving for a home down payment, reducing their credit card debt, saving for a debt-free vacation, or educating children – work together to help each other achieve those goals, and are responsible for each other.

According to dayshanova.com, here are some additional traits of who you might want to partner with and what to be prepared for.

–You have an immense level of integrity. That said, you seldom see them if they keep their word.

–They don’t care about gossip, never!

– Most of the time, they see the positive side of things.

–You are generous with your time and money.

–They respect your limits and have their own limits.

–They will not shame you, and if they do, stay far, far away from this person! Nothing good comes out of shame!

–You must be willing to take full responsibility. For an accountability relationship to work well (especially in a personal relationship such as a friend or family member), you need to be clear about the goals you are trying to achieve. Whether you’re looking to save up for your upcoming college semester, make a down payment on a home, or officially get rid of your credit card debt, you need to take full ownership, not your accountability partner, and find out about your intentions in this relationship.

– Set clear and realistic expectations. Would you like to check in to your accountability partner every week or every month? Would you like to have a common budgeting app or spreadsheet? Just want someone to go to when you run into a “financial hook” or a career move? Would you like to schedule a monthly coffee get-together or a phone call? Setting clear and realistic expectations is very helpful in defining the relationship and they know how to best support you on your journey!

I want to close on a topic that has been all over the news lately, with some personal consideration.

Now that we’re back to normal and people are on the go, will they dress like they did before the pandemic, whatever that means to them? No more sweatpants and t-shirts or pajamas all day. It depends on a number of factors, of course, including whether or not you go back to the office. Traders are understandably keen on whether people will be replacing or upgrading their wardrobes before the pandemic, and if so, with what. Does our recent experience mean that the trend towards informality will only increase?

For me, who has been wearing a jacket and tie since high school and college, in my career – and even now in retirement doing financial education programs and wearing a tuxedo as a house manager – I love being able to “dress up” again but I know that I am unusual. It will be interesting to see the trends and spending over the next 18 months.

John Ninfo is a retired bankruptcy judge and founder of the National CARE Financial Literacy Program. For his previous weekly columns, see http://www.mpnnow.com/search?text=Ninfo

source https://collegeeducationnewsllc.com/are-you-living-within-your-means/