EPISODE 6: Be Financially Responsible! ft. Erron of The Interracial Perspective Podcast!
“Having a good understanding of how you spend funds is important.” - Erron
Financial Responsibility is strictly a common approach, just being responsible in general.
This approach allows you to own your decisions and feel that you can control your financial future at any level. Finding the proper balance, support, and life is critical, founded on realistic expectations for your financial means and affordability.
Having a good understanding of how you spend funds is essential. This can make a difference in what you can and cannot afford. There is a chance that you can buy all the "extra" things in life you want.
This will come with a decisive question that can alter your thought process and allow you to save once the money you make is spent in the right direction.
The soft question you should ask yourself is, "What do I need to survive daily?"
This can have different answers depending on what you value, but for me, it is three essential items:
Roof Over My Head
Basic Utilities Operating
Food on the Table
Knowing what you need to make it daily and through life is crucial but challenging for most to understand.
It simplifies the way of looking at why you are waking up and working the job you work. If you have the standard budget for the three bullet points, deciding how much money you want to bring into the house is driven by that number.
If one decides to live the life they love, it would only cost $1,000, then making a job change, career change, or anything impacting how you earn money can be easily defined by stating, yes, this change will still ensure $1,000 a month will cover the essential items to support my life.
This also will force you to answer a question you may not want to hear or be ready to ask yourself. This question will put a realistic approach to one's life that some won't like to attend.
If you do not like tough questions with demanding answers, my opinion may not be one you want, and that is okay – no need to read on; otherwise, continue reading.
The biggest question to ask, the one most do not want to hear, is:
Is this something I need, or is this something I want?
Understanding the depth of the question will answer the real point: do I spend money, or do I save money today? A need, according to Merriam-Webster, is a "Necessary duty." (Definition of Need, 2023). Merriam-Webster defines want accordingly: "To have a strong desire for" (Definition of Want, 2023).
Diving in, the question to me, says do I need to have this to ensure one of the three simple items I need to survive are met. If you have done this, the money you make should be spent immediately on the bullet points from the soft question. Ensure rent and utilities are paid. Then, ensure food is on the table. Essential utilities are items necessary to do things, such as lights, gas, water, etc.
Once these three things are taken care of, you have a roof, utilities, and food to meet all basic needs—the most responsible actions as an adult. Residual funds (money left over after those three bullets) can be spent on the wants or saved for future wants possible.
Once this is done, you know exactly what you can afford on your household income.
The extra money can now be used when answering the most significant question when shopping, online or in-store. Any merchandise you pick up, ask, do I need this to get through every day, or do I want this to help me through every day?
If it doesn't answer yes to the need, then there is always another day to purchase it. An example would be, do I need cable to make it through the day, or do I want cable?
It may feel like you need it to have entertainment, but that is just a superficial need. You can find enjoyment in reading, basic channels that are free with an antenna, etc. That money, which on average is $100 a month, then can be pocked and saved for a future need that is required.
However, if you have all your debt paid off and you can save money regularly, re-evaluating your budget and want can become a spend that doesn't impact your livelihood.
Suppose you are saving the money you want; in that case, you are paying for all the three necessities you have listed, then spending that $100 for cable can become the "gift" to your house that can be revoked if you decide you want to save additional money in the future or times become lean again, it's a cost you have become comfortable knowing isn't a need.
The key is to ensure you always remember that a want that becomes purchased is never a need that becomes permanent.
If you ever want to increase your savings, stop spending on items that seem to add up, continuously re-evaluate those "wants," and ensure you never transfer to the "needs" category.
Cut those wants off, and you can quickly increase your saving potential again.
References
Definition of need. (2023, September 29). Merriam-Webster Dictionary. https://www.merriam-webster.com/dictionary/need
Definition of want. (2023, September 5). Merriam-Webster Dictionary. https://www.merriam-webster.com/dictionary/want
