In trying to gain control of your financial life, you must consider Wants which is an important piece in the three part formula. Remember you allot 30% of your disposable monthly income in order to satisfy this integral aspect of your financial plan. Besides the economic implications, satisfying Wants is fundamentally healthy and necessary to make you feel well-rounded, happy and fulfilled. But balance is critical.
As human beings we have desires that go in many directions in the material world. Nicer clothes, traveling to Paris, learning to sky dive, eating at Charlie Trotters–the sky is the limit when it comes to Wants. Each of us has our own version of what brings us happiness. Our desires can seem unbounded. Almost everyone could easily imagine spending a million dollars (or nowadays a billion dollars) if just given the chance. We have been raised on images of the American Dream, rags-to-riches success and enormous lottery winnings . Not long ago a man was sworn in as an American Citizen one morning and won several million dollars in the state lottery that afternoon. This makes sensationalized news stories for us to factor into our hopes. Throw in the lures created by highly manipulative advertising and marketing schemes and our desires can get out of balance, especially compared to our actual income.
We may tend to act impulsively on our desires, buying things that are way beyond our means. This is supported by American optimism and creativity. We generally believe that life will get better and virtually all financial problems will be fixed. So the trust supports our wants and these wants construct our dreams. But we need money for a lot of this to happen. In response, we were given a “No problem” offer. The credit industry evolved (or maybe mutated) over the last few decades to fuel our desires. It liberally suggested that we deserve or have earned the easy flow of cash–for whatever we want. For example, having credit cards at our disposal, it is easy to forget that we are borrowing for instant gratification. The Wants get met, but the bills-with outlandish compounding interest rates and baf fling fees, arrive and continue to grow like a cancer. We were lured or duped into a belief system of upward, irreversible economic growth. But eventually the bubble bursts and we are left holding the debt bag.
The solution to this dilemma is to put your feet on the ground rather than building castles in the air. Certainly have big aspirations and dreams but unfold those in steps of progress based on financial facts–both personally and in the larger economic recession. Do not allow your Wants to lead your spending. Strictly contain them within your budget allotment of 30% DMI. Get back in balance. Let the amount of cash in your purse lead the way. With that boundary you can break free of the weight of debt and build a future that is much more prosperous and fulfilling. A balanced approach is really the key to financial freedom and total enjoyment.
*Post theory is primarily derived from the book All Your Worth by Elizabeth Warren & Amelia Tyagi which is highly recommended reading.
Iowa Bankruptcy Attorney Robert Liptak
Fairfield, Southeast Iowa