As we approach the holidays each year, it becomes a wonderful time to spend with family and friends. It also becomes a time to step back, count our blessings, and reflect on how fortunate we are. You might also find that your budget is tighter this time of year, and a little concerned about how that will impact 2016. Let’s take a moment to quiet those concerns, and talk about lifestyle ceilings.
Imagine yourself as a high school senior (which may be painful, depending on how you styled your hair back then), and consider your options for after graduation. College could’ve been an option, but it wouldn’t necessarily have been a guarantee. Chances are, the likelihood of entering the workforce was much higher. Today, it’s pretty much expected that anyone who wants to attend college can. They might end up with student loans, they might have to work their way through it, they might even live at home to save costs, but it’s very much a given.
So what’s changed? We’ve seen an influx in technology, society has evolved, and the overall lifestyle ceiling has gone up as we consider things that were once a luxury to now be a necessity. With these higher expectations and entitlements, it’s important for each of us to decide how to live within our means.
Take John Doe as an example. He was a school principal and administrator for the Philadelphia School District, years ago. At a very young age, every time John received a raise, he added a quarter of it to his cash flow, and placed the remaining three quarters into his retirement plan. John set his lifestyle ceiling, and in turn, was able to save for his retirement throughout the entirety of his life.
The idea of the lifestyle ceiling is to set a limit of how much you’re going to spend, early in your life. If you can learn to live within your budget and below your income flows, you not only give yourself the opportunity to save more money, but you set yourself up for a successful retirement. Learning to live within your means is an important part of life. Especially when it comes to retirement, no matter how much money you have, if you can’t live within your means, you will always have financial problems.
A 2012 study shows that 44% of lottery winners will spend all of their winnings within the first five years. You would think with all of that money, saving would be a top priority, but it seems to be consumed at an even faster rate. What makes the difference? It’s about personal discipline. One of the first steps to financial success, besides having a budget, is the self-discipline to live within your means.
Whether it’s learning to live within your budget, regulating impulse purchases, or simply learning to appreciate the things you do have in life, the holiday season is a particularly important time to re-examine our own lifestyle ceilings. As Mark always says, “If you’re hard on yourself, life will be easy on you.”
If we at Kemp Harvest Financial Group can help you in any way with regard to your financial planning needs, please feel free to contact us.
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