One of the things I hear a lot, from a lot of people, is this: I wish I had more money. The wish for money is almost universal — no matter how much you have right now. Even many of the wealthy wish that they had more money.
Many think that having more money is one of the keys to greater life satisfaction. While having more money can help you achieve a little more happiness (especially if you make less than $75,000 a year), the reality is that more money isn’t going to better your financial situation, or improve your level of happiness, if you don’t know what you’re going to do with it. Indeed, if you don’t have a plan for your money, you can end up in financial trouble no matter how much you make each year.
Pinpoint Your Money Motivations
Rather than just thinking that more money would be nice, think about why you want more money. You need to figure out your motivations. For some people, this relatively easy. If you are having a hard time making ends meet, you probably want more money so that you can pay the bills. If you are drowning in debt, more money can help you pay it off.
Money represents security and financial freedom in these cases. Chances are that when you do get more money, you know exactly where it should go. It goes toward paying down your obligations and toward paying the bills.
Things get a little fuzzier when you have more financial freedom. When you have moved beyond day-to-day survival mode, it becomes a little harder to pinpoint your money motivations. Honestly evaluate the situation. Do you want more money so that you can save more for your future retirement? Do you want more money so you can buy the material status symbols that our society often associates with wealth?
Look at what you’re interested in so that you can figure out what you will actually do with the money. Creating a plan for your money is important if you want to avoid the pitfalls that come with poor financial management.
Planning Your Finances
Without a plan for your money, there’s a good chance that you will just spend it on whatever comes your way — even if that expenditure represents something that isn’t important to you. A plan can prevent that. You need to figure out what’s most important to you, and what you want to accomplish with your money, and then bring your financial actions in line with that.
Some people like to use a zero-based budget to make this happen, giving every dollar a job. Since I am on a variable income, and my pay schedule is never the same each month (few of my clients pay on the same day each month), my cash flow is a little out of whack, so I don’t use zero-based budgeting. However, I still make it a point to plan my finances. I make sure that money is automatically transferred to accounts meant for retirement, emergency fund, and quarterly taxes. I pay my tithing and donate to a local charity. All the bills and necessary expenses (insurance, utilities, mortgage, groceries, etc.) are paid. Then I focus on short-term goals like travel. With anything left over, my husband and get whatever else we want/need, such as clothes, eating out, and entertainment.
This is a system that works well for us. Sometimes I wish I had a little more money, but that’s usually during times when clients are paying late and I have to do a little footwork for the cash flow. Most of the time, I’m happy with where we’re at, and what we accomplish with our money.
Do you wish you had more money? Why or why not?