Probably one of the most common reasons people have money problems is because they live a lifestyle that either perfectly matches their income (spend all you earn) or, more commonly, they live a lifestyle that is beyond their means (spend more than you earn).
David Grant CBE, the former Lord Lieutenant of County Durham, whom I knew from my fundraising days, once gave me a brilliant piece of advice about living beyond your means. He said: ‘If you can’t afford it, face facts – you can’t. Don’t buy it. If you think you can just about afford it you probably can’t so still don’t buy it. And if you are certain you can afford it then try and get it in a sale.’
I never really knew what he meant by that until I became involved in a business where image was everything . . . and I got a taste for expensive cars. I agree expensive is relative but I was sure people would be judging me by the type of car I was driving, so I pushed the boat out and bought a huge Mercedes. I must say for the first few months it was something else – lots of admiring glances and ‘life must be good’ comments.
Then it needed a service. I remember looking at the servicing bill, thinking: ‘I could buy a car for that.’ A few admiring glances and comments later my ego was suitably polished and I was smiling again. Well, that was until it needed a new set of tyres. Then when I crashed it one icy night and had to have the wing resprayed, I started to go off my pride and joy. And just when I was feeling down about it, the new model came out and I still had three years left to pay on the old one!
However, it gets worse, because when you have that kind of car people think you are ‘minted’. It was always me who was expected to pay for the first round, chip in for this and that, source amazing gifts and be ‘the life and soul’. For those of you reading this who spent time with me then, here’s a confession – I couldn’t afford the lifestyle!
Looking back at those times, I have to laugh – it was all about what other people thought and once I’d created the image I had to stick with it. The point is my real friends didn’t care, my wife didn’t care and my kids didn’t care.
So, if you’re living a lifestyle that’s costing way too much here are a few ideas to help you get back in check:
When he was 16, my son got a part-time job. He devised a clever little system where, before he spent anything, he would have to calculate how many hours he would need to work to earn that amount of money. Many times he decided it wasn’t worth the time and effort before he even had to consider the price.
How much time and effort do you have to put in to earn the cost of the latest ‘must have’?