Every financial decision is a trade-off: now vs. later, this vs. that, you vs. others, etc. Financial trouble begins when there is no restraint, budget, or list of priorities. The best financial starting point is to go over what you and your family value the most. Then, how much of your money can go toward housing, transportation, education, vacations, retirement, and other major goals? The process of evaluating your spending and saving will help clarify your values and priorities. This is important because sooner or later, you’ll need to justify your spending decision-making when you or your family are tempted to spend beyond allocated amounts.
A clarifying question that many have found helpful is: “What are you willing to tolerate?”
For a few examples:
- Are you willing to tolerate never being able to retire? Why?
- Are you willing to tolerate your children being unable to afford an education? Why?
- Are you willing to tolerate not being able to afford dental care? Why?
- Are you willing to tolerate living in a high-crime neighborhood? Why?
- Are you willing to tolerate being paid less than what you are worth? Why?
- Are you willing to tolerate relationships that do not support your financial goals? Why?
- Are you willing to tolerate your own financial excuses? Why?
If you are willing to accept these conditions, that is fine, but have you thought about the impact these will have on your family’s future? What other parts of your life have you accepted what is going on and where it is headed? Multimillionaire Loral Langemeier says, “Money is not the most important thing in life. But it does have the most impact in every area of your life.”