She pointed at the longer
column. “This is the amount of money we need to spend on certain expenses each
Then, she pointed at the
shorter column. “And this is the money we have to work with each month.”
“But how do you figure out how
much money you need for everything?” David asked.
We all grow up hearing the same financial advice: Spend less, save more and invest early. While most of these words of wisdom ring true, there are lots of widespread money management tips that are actually false.
Many people overspend and rack up thousands of dollars in credit card debt to live a lifestyle they believe will make them happy, only to discover they are living beyond their means. This, in turn, adds stress and worry … causing unhappiness.
Even after adjusting for inflation, today’s dollar buys much less than it did 50 or 25 years ago. For example, a gallon of gas in 1994 cost just $1.06. In late 2018, the average price for a gallon of gas was $2.88, a full 75% higher than it would be if only adjusted for inflation.