The next financially healthy behavior in our series is “ balances income and expenses.” Balance is a state of being. We strive to achieve balance in life. When it comes to money there is much to balance: wants and needs; long-term goals and short-term goals; security and risk-reward; retirement savings and spend now; debt service and discretionary income; etc.
Imagine yourself standing in the middle of a long plank balanced on a large ball. One side is expenses and the other is income. Your spending choices and realized income opportunities determine how much is added to each side of the plank. The ball represents macro-economic factors that sovereignly shift the center of gravity. Your goal is to maintain balance.
Maintaining your balance requires constant motion. Balance doesn’t necessarily require equilibrium to be successful. Maintaining balance requires attentiveness to details and mini-corrections. Add some to one side or take from the other. Repeat as necessary.
The sides of the plank are not equally weighted. The expense side of the plank is weighted from birth. Humans are an expense from birth to economic viability. Economic viability is when a person is contributing more in value than they are consuming in resources. This even applies to trust fund babies. But they also come with a preloaded income side.
It is easier to maintain balance than it is to initially achieve it. From birth, most working-class families especially the legacy dispossessed, are crawling up the expense side of the plank trying to attain balance. Unfortunately, they must make that journey through a hostile environment. One filled with “trick and trap” financial services (payday loans), targeted financial disinformation (debt consolidation), and the need to make sophisticated financial and investment decisions (401k). Many are ill-equipped to do so. The financially ill-informed are the prey of financial services predatory capitalists. “Experience is a hard teacher because she gives the test first, the lesson afterward.” Vernon Law.
Trial and error is not an option for most. Recovery is often not easy from such money lessons that extract resources from the already low-resourced which could also lead to foreclosure or bankruptcy. Additionally, there are extended periods of imposed financial purgatory effectively barring access to other products and services. These higher standards and lower limits for future borrowing are imposed over a lifetime. The reason there are no non-white Walt Disney or Donald Trump is non-whites don’t get the chance to have multiple bankruptcies. It’s one and done. Win or go home. Rather lose your home.
Here are some things to help you balance income and expenses:
There may come a time in a relationship, as things get more serious, the question, “what is your number?” may be asked. Of course, that question is normally only asked or answered in a serious relationship.
So assume, the relationship is serious enough to provide an answer. There is a decision to be made on how to answer. Self-inflicted shame and guilt may tempt you to be other than honest. What kind of number is acceptable for your partner?
Does your behavior contradict or affirm your goals/beliefs? Are you worried what your number says about how you behave and what you believe.
If you are going to answer, you should answer the question honestly. You should have answered it for yourself, honestly, by now. By the way, if you can’t answer honestly; you are not serious about the relationship and self-deceived.
So how should you answer the question, “What's your number?”
Get your mind out off your crotch, for minute. I’m not talking about sex but rather money.
I'm talking about your savings number. Your debt number. Your income number.
Just as it is important to know your partner’s sexual behavior, likewise for money behaviors. STDs are real. Avoid STDs, sexually transmitted debt. Know your risk factors and resources.
If you are serious, here are some numbers you need to understand about your partner. Some may be deal breakers. Maybe it’s time to be tested.