That crisp, smooth feel of a freshly printed, actual-paper check from your boss, made payable to you, for a pretty good amount (we all thought it would have been more, though… and would have been if it weren’t for all those withholdings…). You were probably in your mid-teens, and probably didn’t have much use for the money, aside from spending it on the things that you wanted or saw everyone else with. But that paper felt good… it felt substantial. It felt like something earned with some hard work and some sacrifice. And it was.
The feeling is a bit different nowadays, though. Just log into your banking app, check the balance, and done.
What is NOT different these days for far too many people is what happens with that money next, after the check is cashed or deposited. When we were younger, it was almost always either spending it, or saving it (for the next big expense). Is that different now?
Given that, in the US, the average household expenditure annually is about $73,000 per year, and the median household income is about $75,000 per year, we are in the ballpark of “it’s not any different now.” It only furthers the argument if I were to highlight the current US household savings rate is 3.5% (which leaves about $2,600 saved per year on a $75k salary… close to that $73k of spending annually), but maybe just a coincidence.
Money can do THREE things for you after you’ve earned it: work against you, do nothing for you, or work for you.
Not all of these are avoidable, though it’s critical to understand what each of these might look like. Once you reframe your understanding of it, you will be able to curate a stronger financial standing for yourself.
Working against you: bills (though sometimes unavoidable or even necessary), revolving debt (like credit cards, always avoid unless you also possess the cash for immediate payoff of the debt), too much savings or cash (negligible interest rates not greater than inflation makes your money less valuable).
Doing nothing for you: “investing” into depreciating assets (cars, oftentimes… are you paying for style points or usefulness?), and also having too much savings or cash (past short-term emergency cash, that money is losing value every day).
Working for you: high-yield savings (to give you the highest return for your short-term emergency money with the lowest risk), budgeting (assigning specific direction for every dollar (debt, taxes, groceries, IRA) before it’s earned), and investing into appreciating assets (there’s a lot: real estate, stocks, bonds, art, crypto, these sound familiar, right?).
While we could complicate the matter further by over-optimizing 100% of every single dollar earned and spent, I find it best to start with just understanding what you’re working with and towards. Of all the money you earned and subsequently spent, saved, earmarked, ask yourself if there is room to improve on efficiency and usefulness of those dollars. We can refine further from there, but start first with the foundational elements.
While payday usually doesn’t come with the same excitement it did as a teen (life is a bit more complex now), it should still stamp a moment of pride into your day, as you ARE the one running the books in your business, and paying yourself yet another month means you’re actually doing it. Take it further though. Clean out your financial closet, make it a usable space in your life, and then keep it clean. Keep your money working for you, so you keep building out the life you are looking for. I presume that’s what any of us really want, right?