2888: How to Stop Being Broke With a High Salary by Lisa Harrison of Mad Money Monster on Intentional Living

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[00:00:39] This is Optimal Finance Daily, How to Stop Being Broke With a High Salary by Lisa Harrison of MadMoneyMonster.com. And I'm your host and personal finance enthusiast, Diana Merriam.

[00:00:54] For now, let's get right to today's post as we optimize your life.

[00:01:03] How to Stop Being Broke With a High Salary by Lisa Harrison of MadMoneyMonster.com.

[00:01:11] The cycle goes something like this. Money comes in, money goes out, and round and round we go.

[00:01:17] So, if you're making a healthy salary, and you're still coming up short at the end of each month, there's a problem.

[00:01:25] The problem is that you're making too much money to be broke. Yet here you are, broke nonetheless.

[00:01:32] I'm going to let you in on a little secret. Broke is normal. So don't worry, you're normal. Yay!

[00:01:39] But wait, who wants to be normal? You obviously don't, or you wouldn't be here. Let's face it, that high salary wasn't just handed to you overnight. You worked for it.

[00:01:51] Now let's figure out how you can go from broke to no financial joke in one blog post.

[00:01:59] Broke is normal. High salary or not, look around you and you'll likely see your friends buying bigger houses, new cars, etc.

[00:02:09] Along with that goes new clothes, dinners out, big mobile phone bills, traveling sports teams for the kids, and extravagant summer vacations.

[00:02:21] In order to keep up with this kind of lifestyle, even for high-salaried couples, you're probably going to be broke.

[00:02:28] Of course, I understand high salary is relative.

[00:02:32] Even if you're on the upper spectrum of high salary, unless you're pulling in celebrity cash, you're still going to be broke.

[00:02:41] Why? Because you're just going to buy even bigger houses, better cars, and even more lavish vacations. It's all relative.

[00:02:50] At the end of the month, if you're not able to save a significant portion of that high salary, you're teetering on the verge of financial destruction.

[00:02:59] You might even benefit from a financial intervention.

[00:03:04] It's really simple to figure out if you're broke.

[00:03:07] Subtract all of your monthly expenses from your monthly income.

[00:03:11] If you're negative, you're broke.

[00:03:14] If you're close to negative, don't get excited. You're also broke.

[00:03:19] There was a wonderful book written by Thomas J. Stanley, Ph.D., titled Stop Acting Rich.

[00:03:26] You might want to read it.

[00:03:28] Don't be normal.

[00:03:30] Most normal people will live at their level of income or beyond it.

[00:03:35] If you're consistently finding yourself with more month at the end of your money, you're spending more than you earn and you need to fix it.

[00:03:43] Fast.

[00:03:44] In fact, you might not even realize you're spending more than you earn.

[00:03:48] Oftentimes, it can take years, seriously, years to have it catch up with you.

[00:03:54] Monetary gifts from mom and dad, tax refunds, and annual bonuses have a tendency to mask financial problems.

[00:04:03] Besides, why should you care that your credit card is up a few thousand bucks?

[00:04:08] Mom and dad always give you five grand for the holidays anyway.

[00:04:12] But what if they didn't?

[00:04:14] What if mom and dad decided to buy you some new furniture this year?

[00:04:18] What if you didn't get the five grand you were counting on?

[00:04:21] It happens.

[00:04:22] And when it happens to you, you'll realize you're spending more than you make.

[00:04:27] So stop it.

[00:04:28] Why does everyone want to be an individual except when it comes to their money?

[00:04:33] When it comes to money, it seems like everyone wants to live a robotic existence.

[00:04:38] Buying the same houses, the same cars, the same clothes, the same everything.

[00:04:44] What happened to individuality when it comes to money?

[00:04:48] If you want to show off your individuality, stop doing what everyone else does.

[00:04:52] If you employ this strategy with your money, you'll be trading your day job in for margaritas on a beach in no time.

[00:05:00] How to stop being broke with a high salary

[00:05:04] The quickest fix to stop being broke with a high salary is to live below your means.

[00:05:12] It's the oldest wealth-building secret in the book, and yet it escapes most of us.

[00:05:17] Believe me, my husband and I are the exceptions, but we weren't always.

[00:05:22] We used to do the same things everyone else did.

[00:05:25] We bought the houses, the cars, and the clothes.

[00:05:28] Here's a quick and dirty tip list of things you can do today to stop being broke.

[00:05:34] Figure out where your money's going.

[00:05:37] Analyze your spending.

[00:05:39] Stop wasting your money.

[00:05:41] Create a budget.

[00:05:44] Stick to your budget.

[00:05:45] Invest the difference.

[00:05:48] And live stress-free and happily ever after.

[00:05:52] If you make too much money to be broke, you might want to take a quick inventory of what's coming in and what's going out.

[00:05:59] Chances are, you'll be able to make a few modifications today that will save you hundreds, if not thousands, every month.

[00:06:06] Once you get the financial ball rolling, keep it moving by making more modifications to your monthly habits.

[00:06:13] For instance, if you like to trade, then you need to make sure that you're doing it right.

[00:06:19] That includes only trading with what you can afford to lose.

[00:06:23] Those are the kinds of things you can keep as habits to help you from not being broke.

[00:06:28] One of the absolute best things we ever did to motivate us to stay on track with our money was tracking our net worth.

[00:06:36] Your net worth is simply all of your assets minus your liabilities.

[00:06:41] So, whether you're paying down debt or investing, your net worth is going to go up.

[00:06:47] Eventually, you might even find yourself staring down the possibility of early retirement.

[00:06:52] You might not be on par to retire in your 30s.

[00:06:56] But early retirement at any age is quite an accomplishment.

[00:07:00] You'd be surprised how quickly couples with high salaries can build wealth,

[00:07:04] especially when they stop being broke and start living below their means.

[00:07:09] You can do it too.

[00:07:10] Be an individual.

[00:07:12] Go against the grain.

[00:07:13] And wonderful things will happen.

[00:07:20] You just listened to the post titled,

[00:07:22] How to Stop Being Broke with a High Salary,

[00:07:25] by Lisa Harrison of MadMoneyMonster.com.

[00:07:29] And I'll be right back with my commentary.

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[00:08:34] What's considered a high salary is very relative to your geography and circumstances.

[00:08:39] But I think this article exemplifies the impersonal and dispassionate nature of money.

[00:08:47] Wealth is built in the gap between your income and your expenses,

[00:08:50] and that rule applies regardless of your level of income.

[00:08:55] If you make a high salary and you spend it all,

[00:08:58] you may appear to be rich, but you've done nothing to build wealth.

[00:09:02] Wealthy people invest their money in assets.

[00:09:07] They increase the gap between their income and expenses and deploy that gap strategically.

[00:09:13] If you salivate over the materialism that money can buy,

[00:09:17] you are overlooking its real value.

[00:09:21] Money creates options.

[00:09:23] It can buy security when life throws you a curveball,

[00:09:26] and it can buy you full autonomy over your time.

[00:09:29] If that isn't as interesting as the newest gadget you have your sights on,

[00:09:34] you'll likely stay broke.

[00:09:36] My big turning point with my personal finances

[00:09:39] came when I realized that I didn't have an income problem.

[00:09:43] I had a money management problem.

[00:09:46] I came to realize that I was wasting a huge opportunity

[00:09:50] by wasting my money on mindless spending.

[00:09:54] Once I began focusing on how to build that gap

[00:09:57] between my income and my expenses,

[00:10:00] my entire perspective on money shifted.

[00:10:03] I understood that every dollar I didn't spend impulsively

[00:10:07] was a dollar I could invest in my future.

[00:10:10] Over time, those small decisions compounded,

[00:10:13] and I felt more in control of my financial situation than ever before.

[00:10:19] But that'll do it for today.

[00:10:21] Have a great day and start to your weekend.

[00:10:23] Thank you for listening,

[00:10:24] and I'll be back here reading to you tomorrow

[00:10:26] where optimal life awaits.