We talked last week about getting laid off from your job, but we did not talk about its negative impact on your budget. You know it’s important to maintain an emergency fund (three to six months worth of expenses), and the best time to do that is before you need it. But why is it so hard to save up your money?
Status
Society trains you to attach your self-worth to your income. It’s one way to evaluate success or failure. Have you heard the motto, “He who dies with the most toys wins”? People are competitive. In the workplace, the person who has the most money has the most power. You carry that mindset into relationships outside of work. You gravitate toward people with similar socioeconomic backgrounds. If you feel your income is lower than your friends, then you’re embarrassed to discuss it. But talking about finances can create community because people have knowledge to share. For example, if you both have car loans, what is their interest rate? Is it lower than what you’re paying? That conversation may not only save you money, but also build a stronger relationship. Comparing yourself to others is useless. There will almost always be someone in your life who makes more money than you. You decide how much status, comfort, and peace of mind is enough for you.
Humans are Judgy
Discussing money openly is still generally considered impolite. Seventy percent of Americans think money conversations should be kept private. Other people aren’t the only ones judging you based on your income. You also judge you. If your income is tied to your sense of identity, then revealing it feels like exposing something deeply personal. It’s especially painful if your income does not match your goals. Society places a lot of value on financial success. You may feel looked down on if you know your income is less than your coworkers. That is one of the reasons the culture of the American workforce traditionally gives for the strong privacy policy around finances.
Paradigm Shift
The pandemic made the workforce rethink what making a living looks like. For example, is there more to life than working under the terms and conditions someone else sets? Or why do you care about society’s opinion when they aren’t living your life? If tightening your budget will enable you to live the way you want, then try these ideas.
- Determine essential expenses (housing, utilities, groceries) and cut back on non-essential expenses (eating out/food delivery, entertainment, subscription services)
- Review your health, (medical, dental, eye) car, life, and any other insurance policies. Make sure you have adequate coverage, don’t have more than you need, and you aren’t paying more than necessary
- Pay off your credit cards ASAP. Look for a card with a lower interest rate. When you find one, contact your bank and ask them to match it
- Work an additional flexible-schedule job (dog walker, food delivery driver, consultant) to supplement your income until you get your finances where you want them
Saving your money is hard because it’s not about money. It’s about how you feel about money. How do you prioritize how much is enough? Please share in the comments.