As a financial literacy educator, I believe I must give all of the class attendees as many tools as I can that will help them. Among the first tools, they need to become financially successful is a budget. I know, I know, you are groaning at that word “budget” but I ask you to hang in there with me to see if I can change your minds with a budget pie chart.
One instructor who influenced me used to say, “Think about what you think about.” What he was urging me to do was consider my true convictions and not ones that may have been foisted upon me, but to value my own. To this day whenever I am tempted to “go along to get along”,
I stop, get quiet, and think about things. That includes reassessing your budget. The largest expense of a household is usually housing, ranging from 30%-35% of the total budget. This is completely normal and not problematic at all. However, this is based on averages but what happens when your life is recalibrated and you want to do something that isn’t average? Could you be brave enough to swim against the tide?
Since we’ve been on lockdown, one of my favorite shows has become Tiny House Nation. The ingenuity that it takes to shrink a space while maintaining livability is amazing. The participants have a wide range of reasons for buying a tiny house: to save money to pay off school loans; to be able to pick up your house and live anywhere you want; to no longer be “house poor”. A movie, called Nomadland, tells the story of a community of people who live in RV’s and travel across the country. A girl asks the main character if she is homeless and the character answers, “I’m not homeless, I’m house-less and there’s a difference.” I thought that was such a courageous example of what reframing your life could look like.
The more we see something, the more we want it. In the same way, lifestyle “reality” shows don’t just entertain us, they teach us. They form our desires and can influence us away from what we truly want. What happens when having the newest video console, the most expensive smartphone or gadget, or the largest home no longer squares with what you truly want?
Would you intentionally take a lower-paying job to be home with your family more? Would you move to a moderate neighborhood if it meant you could visit relatives in another country each year?
I was teaching a budgeting class with people who were going to purchase their first homes. As I was looking over their budgets, one woman’s was quite different from the pie chart I had provided (see above). Her mortgage was only 20% of her income, the bills were nicely covered but her entertainment fund was huge.
She explained that she chose to be frugal so that once per year she could splurge. She would buy front row seats at concerts for $800 each; go to New York and stay at expensive hotels and get the best tickets for Broadway shows. She would go to Las Vegas and fly first class to see entertainers in residence. This was the result of truly thinking about what was important to her and creating a budget around that. She sliced her pie in a way that suited her authentic desires—tiny homeowners, do that as well.
In a world that bombards us with messages that we are only as good as the things we own, could reassessing your budget pie chart help reflect the life we truly want to set us free? Could you be brave enough to believe that self-worth does not equal net worth? I encourage you to think about what you think about, grab your budget pie and start slicing it your way.
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