GrubHub has a new TV ad that features the song lyrics by Queen “I want it all and I want it now.” This ad seems to sum up our consumer culture and precisely why so many people with good incomes can’t seem to get a grip on their financial situations.
Americans of all income levels struggle with unexpected expenses and debt, and, as a result, find it difficult to even have financial goals, let alone achieve them. Just this week, it was reported that the famous lawyer, Michael Avanatti, is accused of embezzling nearly $2 million from a client’s settlement to pay for his “own expenses and debts.” How can a guy like that run out of money?
A 2015 study by the Center for Retirement Research found that of those in the top one-third by income, one in three reported having difficulty covering regular expenses. I’ve seen it myself. I recently spoke with a couple making $400,000 a year, but going further into credit card debt with each passing month.
This couple seemed confused. They made so much money but couldn’t understand why they weren’t getting ahead. Eating out twice a day, designer clothes, and weekend getaways had something to do with it, but they hadn’t tallied their expenses. They also weren’t paying their debt down, which caused them to wrack up extra interest charges, and their careless approach to paying their bills resulted in unnecessary late fees. They simply weren’t paying attention.
It could be that high income people like these simply believe they don’t have limits. They make enough money, they shouldn’t have to worry about how they spend it. They want it all and they want it now. But that mindset is a trap. It can keep you on a treadmill of always needing to make more money, or in the case of Avanatti, to steal it.
There is always a limit. No matter how much money you make, if you want financial security, you actually have to do something about it. You must always pay attention to how you spend your money, and save for your financial goals. And you don’t even need to make a lot of money to do it.
Alan Naiman, a Seattle social worker who died last year at the age of 63, managed to save enough to give a small fortune to charity when he passed. By living an extremely frugal life, he was able to save and invest enough to have several million dollars in his own estate, and to his own savings he added his parent’s estate. All tolled, he donated $11 million.
Of course, these stories are extremes. You are probably not spending your way to bankruptcy despite a top 1% income, nor are you willing to hold your shoes together with duct tape in order to reach your financial goals. But they do illustrate the possibilities and what is required. While it may be true that you can have anything you want, you can’t have everything you want. You will always have to make choices. Choose wisely.
For a comprehensive, step-by-step guide to building your own financial plan, pick up my book, Save Yourself; Your Guide to Saving for Retirement and Building Financial Security. It is now available on Amazon.