Can you afford your job?

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Learning to control your day to day spending is one of the most important skills to master if you want to have high financial wellbeing. And in my earlier post and video – How to get control of ALL your day to day spending – I explain how to do this.

I’m not a big fan of penny pinching and coupon cutting, as that promotes a scarcity mindset, but identifying opportunities to spend less on the things that you included in your spending plan make sense. For example:

  • Could you change your mortgage to a cheaper deal?

  • Could you get lower cost car, life or health insurance?

  • Does your employer offer a retailer discount scheme?

  • Do you really need to finance a new (or newish) car or could a slightly older and more fuel-efficient version do?

  • Could you be more tax efficient? For example, could a higher pension contribution enable you to avoid or reduce the child benefit tax charge?

  • Do you need to have the latest smartphone on a contract or would a second-hand version on a SIM only deal be acceptable?

  • Could you replace expensive loans or credit cards with lower cost alternatives?

But what if you’ve created your own Smart Spending plan and you haven’t got enough money coming in to meet all the things that you need and want? Without action this will lead to you spending money you don’t have and the inevitable accumulation of unwanted debt.

The simple answer is you’ll need to earn more. Whether from your job, your business or property investing.

Knowing how much money you need to live your current and future desired lifestyle enables you to be much more intentional about your work choices and decisions.

If you know you need, for example, £3,000 after tax to live your desired life, then every month that goes by when you only earn £2,400 is a month that you are selling yourself short. Each month it’s costing you £600 to stay in that job or business.

If your income needs to increase, then you need to either:

  • Get a rise in salary or a clear means of earning a bonus from your current job to meet the shortfall, which might mean you need some training or to change roles;

  • Get a side hustle, additional job or, if feasible, rent out a room in your home;

  • Get a new job paying what you need;

  • Start a business that will generate you enough income;

  • Stop an existing business if it can’t pay you enough income and get a job that will;

  • Investigate whether rental property investing could generate the income you need (but remember that this is a business as well).

The right answer will depend on your own circumstances, preferences and skills. But being clear what your current lifestyle (including saving and debt repayments) really costs and how much income you need to have coming in to meet it is the first step to doing something about it.

Let me know how you get on.

Warm regards

Jason

Jason Butler