One of the mistakes that many people make as they make financial resolutions and vow to change how they deal with money is that they separate their money from their lifestyle. In order to make the changes you want to see in your financial life, you need to consider your finances as an integral part of your lifestyle. Making lasting money changes means that you also have to change your lifestyle habits.
Many of us make financial resolutions at New Year, but how many of us make the lifestyle changes that may need to go with those money changes? For example, you might resolve to reduce your debt. However, without changing the spending behaviors that lead to debt, this goal is not going to be met. In order to change your spending behaviors, you sometimes have to make a lifestyle change, accepting that you can’t buy everything you want, and possibly living more frugally, buying fewer fripperies, and perhaps switching things up so that you cook more food at home instead of getting take out.
I’d like to max out my contributions to my Roth IRA. However, unless I make a couple of lifestyle changes, like not spending money on unnecessary dinners out, it’s going to be difficult to reach that goal. I’m not exceeding my income, and I put money aside for retirement, but it’s probably not enough. If I don’t want my future lifestyle to be a significant downgrade, I need to make small adjustments now in order to put a little bit more away for retirement. (This also includes opening a Roth IRA for my husband and maxing that out, and then, down the road, opening a 401k and putting what we can there, too.)
In the end, it is important to realize that how we live directly impacts our spending habits, and that, in turn, affects our money situation. If you want to make money changes, you also have to evaluate your lifestyle, and make adjustments in that area.