‘I need this’ vs. ‘I want this’.
Lifestyle Elasticity
Knowing the difference between these 2 means we have lifestyle elasticity.
And, that can lead to either meeting your financial goals or not.
It can take quite a while to learn how to do this, but it matters to our future. Learning to be able to tell the difference between the 2 takes work and practice.
The first step to go through is creating their monthly cash flow statement (e.g. budget).
Creating a monthly cash flow statement is also know as a budget, and it is also known as a Spending Plan.
This helps you to understand where your money goes in order to assess whether it’s where you really want it to go.
The ability for a person to know what one needs vs. what one wants is the essence of lifestyle elasticity.
It affords one the ability to pare back during times one may have an unexpected expense or income changes.
When we have an unexpected expense, and don’t feel we can make trade offs to meet the expense, we either go into debt or we pull the money from our savings account.
Not being able to know where to make trade offs to accommodate these events means you don’t have flexibility in your budget.
Means you don’t have Lifestyle Elasticity: Knowing when and where to pare back when you need to.
Living below your means and being able to know when and where to make tradeoffs: Super important to your ability to reach your financial goals, to stay on track, and, perhaps most importantly, to feel empowered with respect to your money.
Next Step
Ready to take the next step and work with a fee-only CFP? Reach out to schedule a Discovery Meeting to learn more.