How Much Money is “Enough”?

People who are in the middle of a money mess usually say that they got there because they didn’t make enough money.

People who are in debt usually say that the way to get out of debt is to make more money.

People who don’t put money into savings at all usually say that they don’t make enough money to save any.

The common theme is that most of us don’t feel that we make enough money and that the solution to any financial problem we might have is to make more money. We think, “If I could just get a raise, I’d be able to get out of this.” or “If I had a better paying job I’d be able to pay off my debt.” That isn’t how it usually works out though.

We usually get into financial trouble because we spend more than we make. The problem isn’t usually our income. It’s our spending.

To illustrate this point, here are a couple of more famous (or infamous) examples:
Nicolas Cage, who earns around $20 million per picture, made headlines for his financial woes last year.
Evander Holyfield made millions as a boxer, yet ended up in foreclosure due to lavish spending habits that exceeded his income.

The list of celebrities who earn millions and wind up in financial trouble is very long. They all made a lot of money but they spent so much that they could not pay the bills. We all would like to think if we made the kind of money these guys make, we would manage it better. Unfortunately that doesn’t bear out. Most of us, when we find ourselves making more money, end up buying more stuff. We end up putting more on credit because we can afford the higher monthly payment. We buy a more expensive car and have the larger monthly payment to go with it.

If you have a money mess or if you simply want to save more money for retirement or any other purpose, start with looking at what you’re spending. There’s no doubt that additional income will help. The problem is you may or may not be able to directly change the amount of money you make overnight. Some people can, but most of us can’t. What we can do is change what we’re spending.

The first step to financial success is spending less than you make. Whether you make $30,000 per year or you make $30 million per year your finances will be a mess if you are spending more than you’re making. On the flip side you will get ahead and make progress toward achieving your financial goals if you never spend more than you make. If you don’t get a grip on this one point, no amount of income will ever be enough.

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