Somehow, we switched some old truisms around. We now believe there is such a thing as a free lunch, and we believe that more is better, no matter what the cost.
Now, this may be somewhat unfair, but there has been a mindset shift, leading us to our current imbalance issues.
If you look at past decades (and, I am talking about the 70s and earlier), money was earned, and we then used it to pay for our basic needs and save some for things we wanted. There was a barrier between earning and wanting. We did not let things get out of hand. We knew what we needed to survive, and all else didn’t matter as much. Simply stated, we lived within our means, and we controlled our desires.
When we look at the 1980s forward, the box around what we earned and needed and what we wanted disappeared. And, the overall box began to grow. We wanted more and more. Our wants became our needs, even though the earned dollars were not necessarily there to support our new blurred habits.
During this time, we lost our faculty on what we earned needed to support such as food, clothing, shelter, and rainy day or retirement savings. Who we thought was really going to pay for it all in the end still baffles me. There is no such thing as magical financing. What you earn has to equal what you pay out; otherwise, the debt spiral spins, and we are all feeling dizzy with the reality.
This misaligned financial thought and practices didn’t just happen in our homes. It happened in our businesses and in our governments. We cannot just keep spending, not worrying about who is going to really pay for it. Ask the underwater homeowners or the governments of Greece, Italy, or – potentially soon – United States of America.
Here may be some essential principles we lost touch with and need to regain:
Principle 1: Basic life needs come first, and we need to live within them. What does “bigger” give us? On the supersize front, we found it gives us health problems. On the home front, we found it gives us upside down loans. On the government front, we found that it delivers decades of high unemployment and super committees who need to act as the clean-up crew after a huge unpaid for, out-of-control celebration.
All “bigger” and “more” leave us with are headaches and pain, and the tough work of getting our wants under control and back within a defined, affordable, and realistic box.
We need to focus on budgets again, matching our income to our expenses. It isn’t that we need to live in a box; it is that we need to live within our means. We need to re-focus on our basic needs and ignore the pressures of all the wants surrounding us.
Principle 2: Nothing is free, and bigger isn’t better. Everyone loves a good deal! If we get a little more food for what we pay, we feel like we got our money’s worth. If we get a few more tax deductions, then we feel good because someone else must be paying more. If we get a bigger home, then we must be doing better than our friends and neighbors. All this comes at no cost.
Of course, all of this is untrue, and it creates a fake sense of well-being!
In health, we know a set of calories we need to eat within in order to keep a healthy weight. In personal finances, we know what our take home pay is, so we know what we need to live within. None of these elements affect living a life of meaning. All of these elements – taken with the mindset of things are free and more is better – lead to a false sense of worth.
Prevention never sounds fun, yet it is what keeps us on a track for a healthy life – personally, financially, and professionally. It is focusing on our basic needs and fulfilling them, period.
Principle 3: The meaning of life is not based in stuff. Stuff goes away. Just look at our landfills, and we see the truth in this statement. More stuff does not deliver a more meaningful life. In fact, a streamlined life that is focused on doing rather than collecting is probably much more meaningful. A stuff-crammed life means little in the end.
Money can help fund meaningful initiatives; there is no doubt about it. Money also can help fund buying lots of clothes, cars, and other stuff; there is no doubt about it. The first will deliver more life meaning than the second. Using your time and talents to help someone will deliver a higher life meaning, period.
Stuff is stuff. Living a meaningful life is based on doing.
Another shift seems to be happening, our box of wants may be getting smaller, largely due, probably, to the economic challenges we now have. We are beginning to keep our earnings focused on what we need to survive and less on the stuff we want. The wants may be smaller in size, putting a more healthy formula in place.
Living through certain times has an impact on people who will be leading the next generation. Think growing up in the Depression and then setting up a household as adults. They were probably like my grandparents – frugal, satisfied.
With our current economic issues, the generation coming through this may have a different approach than we did. It gave me a great deal of satisfaction when my oldest teen son said that he wanted to have a job that focused on what he enjoyed doing rather than on the income it produced. There is a better balance to take in our lives.
Here’s the deal. We need to adjust our boxes of wants and needs and live by a set of principles that does not get our life out of whack. We need to focus less on physical stuff and focus more on meaningful stuff. We need to lead our lives on sound financial and life principles.
Do you believe a shift is happening, getting our needs and wants more in balance? What meaningful stuff are you trying to focus on?