You might not have noticed it but you have been leading a financial lifestyle of your choice. A lifestyle that subconsciously direct the way you spend or save money. In general, there are three categories of common financial lifestyle:
A Lifestyle based on Credit (Cards)
You are leading a life beyond your financial means and almost everything is financed by enormous debt. You might be living a "glamorous" life - driving the newest and best cars; wearing the latest high-fashion clothes; living in a private condominium - but you are living on credit. You decide your purchases based on whether you can afford the monthly payments. You might have reach a point that you are not able to finance or pay off the monthly expenses with your monthly income. You would just pay the minimum sum of your credit card bills and roll over the balance. Interest will be charged on your outstanding balance and your debt snowballs.
A Lifestyle based on Paycheck to Paycheck
Unlike the above lifestyle, you are leading a lifestyle that spends with a paycheck mentality. Your monthly income comes in and goes out almost immediately. You consume as much as your income allows you to. Just like the lifestyle based on credit, you buy the latest gadget, clothing and even dine out often. However, you diligently pay off your credit card bills, mortgage and other financing. You do not allow your debt to snowball but you are not able to build your wealth.
A Lifestyle based on Saving
Saving like a scrooge is a lifestyle and this is the extreme end. There are also people who take a better approach and save moderately from their monthly income. Do these people have credit cards and debts too? Yes, of course. But their debt is likely to be for a home mortgage with a payment they can well afford. They will also be using their credit cards for shopping and dinning; however the amount used is after what they have planned to save or have already saved. You might not have the highest income when compared to people from "A Lifestyle based on Credit (Card)" or "A Lifestyle based on Paycheck to Paycheck"; however over the course of your lifetime, you will eventually add (or save) up to substantial wealth.
Are these lifestyles familiar? Do your friends have such lifestyles?
The lifestyle you lead matters. If you do not even have any savings, how do you start investing?
Read: "Take Charge. Plan Ahead." - MoneySENSE
Read: "Take Charge. Plan Ahead." - MoneySENSE
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