Your lifestyle is about more than what you do for fun and where you live. Lifestyle, in a nutshell, is how you spend your time and the environment where you spend that time. And while that definition might not immediately bring personal finances to mind, it’s extremely important.
After all, maintaining your lifestyle requires a certain amount of money. How you acquire that money affects how you spend your time, which therefore affects your lifestyle. Personal finance and lifestyle are tightly intertwined, and sometimes a delicate balancing act is required to achieve greater happiness and satisfaction. Here are a couple of things to keep in mind as you plan for your future and how to financially support it.
The now versus later mentality
As you get older, your priorities might shift. However, that doesn’t mean you can’t lay out a basic timeline of certain milestones you’d like to achieve. Once you have that somewhat established, it’s time to reverse engineer how to get there within your preferred time frame.
Of course, this all depends on what you’re willing to sacrifice and when. Do you want to live frugally in your youth to build up investments that pay off later? Maybe you don’t want to “waste” your 20s and 30s with excessive work or modest expenditures. If that’s the case, just know that your lifestyle expectations for later in life may need to be adjusted.
Your lifestyle can affect your future finances in ways beyond simple spending. If you regularly engage in physical activity, for example, you’re statistically likely to spend less on health care costs as you age. The bottom line is, always consider how your actions may affect your finances down the line.
Is it better to adjust your lifestyle or your earnings?
When you can’t have everything you want, it’s time to make adjustments. Knowing when to cut back is hard enough, but knowing where to cut back can be just as tricky. At the end of the day, it will ideally boil down to values. This isn’t a reference to morals either. It’s really about sitting down and figuring out what in your life brings you the most value. It might be possessions, travel, time or any number of things.
For example, you might be the type of person who values time with family above all else. If that’s the case, there are a few ways to increase that within your lifestyle. One option might be early retirement, which typically requires a lot of work time and savvy financial decisions earlier in life. Alternatively, you might avoid careers that require long hours or extensive travel, which sometimes eliminates certain high-paying career paths. So, if you end up deciding to trade time for money, you’ll need to adjust your spending to support that decision.
Sometimes people get caught up in what they’ve always been doing and don’t reflect on whether they have any other options. In the case above, a person might feel stuck in their career and believe that they have no choice but to continue down the same path, even if it means sacrificing time with their family.
However, it’s essential to recognize that there are always alternatives and possibilities for change. This might involve further education to transition into a career with a better work-life balance or perhaps starting a side business that allows for more flexibility. It’s crucial to reassess your priorities every so often and be open to adjusting your plans to align with what truly matters most in life.
Striking the right balance
Like most things in life, there is give-and-take between lifestyle and finances. With careful planning, budgeting and ongoing assessments, you can ensure you have enough wealth to live the life you want.
This article was written by Justin Donald from Kiplinger and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.
