When you’re setting out to make your budget, you usually start by listing out all of your expenses. Then you compare it to your income and make adjustments as needed to get positive results.
But how much money do you really need to get by?
Well, according to a story from CNBC, a new Gallup survey says that the average American family of four thinks they need $58,000 to get by. That figure is more than double the poverty threshold of $24,000 for a family of four.
Now I know from experience that you can (and many people do) survive on far less than $58,000. What’s interesting about the survey is that it asked how much you think you need.
Many of the things we think we need are really not necessities at all. We don’t need cable television, a cell phone, or internet. We don’t need restaurant meals, alcohol or cigarettes. Most of us don’t need more than one vehicle in our garage.
The truth is that we really only need food, water, clothing and shelter to get by. And how much we pay for those things can depend on where we live and how closely we monitor those expenses. An avid coupon clipper and gardener can keep their food costs very low. Thrift store shoppers can save big on clothing. Avoiding areas with a high cost of living (like major metropolitan areas) can significantly reduce the cost of your home.
We tend to grow to the size of our income. The more we make, the more we spend, and the more we think we need. But if you really take a close, hard look at your budget, you will see that you need much less than you think.
Just think what thinking like that could do to your finances! If you were to live on what you really needed to get by and then were able to save or invest the rest, you would accumulate a sizable nest egg in a short amount of time. You could pay off debt in just a few years instead of a few decades.
Making that change in thinking is easier said than done, or there wouldn’t be whole books on adjusting our attitudes to money.
But it is possible to make that change, and you can start today. Before you pay for anything today, ask yourself if it is something you really need. You may find that your answer helps you keep more of your money in your pocket.