The Other Half of Personal Finance

I have been reflecting a bit lately on what makes a person well off. Compared to many of my peers, it seems like I am well off. They often seem to have regular complaints about having no money, and how I am so lucky to be able to go on holidays and enjoy my life.

But here's the thing. My wife and I have an income that puts us marginally below the median for 2-person families, while many of our friends...I don't know exactly how much they make, but many have at least one engineer in the family, so I doubt they're doing too badly. Additionally, we were later into the housing market, so have a larger mortgage, and have a not insignificant amount of student loans debt.

Yet we seem to be better off. Never carry a balance on credit cards, have money to do the things that we want to do, and - most importantly - on top of all of our monthly expenses, we're still able to put away $720/month into savings...mostly for short term goals like trips, but some for retirement as well.

A lot of people seem to blame their lack of funds on the idea that the government's inflation numbers are goosed to make inflation look lower than it really is. This seems to be why so many people are buying into the story told by shadowstats, despite many of his claims being soundly debunked. How often do we hear that things keep getting more expensive, while wages stay the same? The reality, of course, is that we've never had more disposable income, but it's also never been so easy to dedicate most of it to your bank's bottom line.

I have become convinced that most people's complaints about not being able to make ends meet are due to an inability to track and understand where they spend their money, which leads to owing money on their credit cards, which then creates a vicious circle where it becomes increasingly difficult to get their finances under control. I am constantly disappointed with my lack of self control in spending money, and yet, I can only think of how much worse we'd be if we didn't watch it, and just waited for the bills to arrive to figure out where the money to pay them was going to come from.

So, for the rest of the month, since I really don't have any investing news to discuss, I'll be doing a series on money management. How to turn that modest income into a comfortable, happy, lifestyle.