Are you living within your means?



You know that financial educators, financial planners and financial writers have always emphasized the importance of people living within their means as part of a strong financial plan, so that they can achieve all of their financial, professional goals. and personal. Recently, however, the emphasis has been on “living below means”, in order to emphasize the need to save for emergencies, anticipated expenses and a retirement with dignity, so as not to spend all that is needed. you win.

If Americans followed this advice, they would have zero credit card debt, reasonable and affordable mortgages, reasonable or no auto loans, and adequate savings, but that would mean they would live like we did in the years. 1950s, 1960s and early 1970s, when there were no credit cards, no home equity loans, and only three-year auto loans. It worked then, and it still works today.

Having said that, I recently received an email from CW, a former colleague and bankruptcy lawyer, who primarily represented debtors when I was on the bench. He said he thought of me after reading a May article in the New York Times about the monthly expenses of six families in various parts of the country.

He reminded me that: “I know that we have always agreed on fault, personal liability or the liability of the creditor. Easy credit is just too easy. Fun monthly expenses like $ 899 or $ 528 for restaurants, $ 917 for horse boarding, riding and guitar lessons, $ 769 for animal grooming and $ 316 for kids’ activities, don’t m It hasn’t come as a shock to today’s spending culture, even when you annualize it, and that’s without questioning if these families could actually “afford.”

However, CW’s response was, “Come on, make an effort. Does anyone even try to live within their means ”?

Talking about living within its means is something the federal government has long forgotten, except that the Biden administration talks about raising corporate taxes to fund its trillions of dollars in proposed spending programs. Funny, a proposed 15% minimum corporate tax, essentially a flat tax, apparently works for corporations but not for individuals, which we discussed. Also, when they throw out all these numbers, remember that a trillion dollars equals a trillion dollars and a billion dollars equals a trillion dollars.

In the past, I have encouraged students and everyone to increase their financial IQ, in part by seeking advice from a close friend or family member who is clearly good with their finances and does whatever they want. should. They have sufficient savings; they live within their means; they avoid or minimize debt as much as possible; they have a realistic budget that they can stick to; they have smart investments; and they have a solid overall financial plan.

Recently, I learned that this concept has become formalized today, like so many things, in what is called savings and accountability circles. Couples or people who have common goals, like saving for a down payment on a home, eliminating credit card debt, saving for a debt-free vacation or for children’s education, work together to help each other to achieve these goals and are accountable to each other.

According to, here are some additional characteristics of who you might want to partner with and what you need to be prepared to do.

–They have an immense amount of integrity. This means that you rarely see them going back on their word.

–They don’t care about gossip, ever!

–More often than not, they see the positive side of things.

–They are generous with their time and their money.

–They respect your limits and have their own limits.

–They will not shame you, and if they do, stay far, very far from this individual! Nothing good ever comes from shame!

–You must be prepared to take full responsibility. In order for an accountability relationship to work well (especially in a personal relationship like a friend or family member), you need to be clear about the goals you are looking to achieve. Whether you’re looking to save for your next college semester, a down payment for a house, or officially want to get rid of your credit card debt, you need to take full ownership, not your responsible partner, and be clear about your intentions in this relationship.

–Set clear and realistic expectations. Would you like to check in with your accountability partner weekly or monthly? Do you want to have a budgeting app or a shared spreadsheet? Do you just want someone to turn to if you have a “financial hitch” or a career change? Do you want to organize a monthly coffee meeting or a phone call? Setting clear and realistic expectations is very helpful in helping define the relationship and so they know how to best support you on your journey!

I want to end with a subject that has been in the news lately, with some personal thoughts.

Now that we are back to normal and people are outside, are they going to start dressing like they did before the pandemic again, no matter what that means to them? No more sweatpants, t-shirts or all-day pajamas. Of course, that will depend on a whole series of factors, like if they will return to the office. Retailers are understandably very interested in whether people will be replacing or updating their pre-pandemic wardrobes, and if so, with what. Does our recent experience mean that the trend towards informality will increase further?

For me, who has worn a jacket and tie since high school and college, in my career – and even now in retirement, when I attend financial literacy programs and wear a tuxedo as a house manager – I love power ”still, but I know I’m unusual. It will be interesting to see the trends and spending over the next year to 18 months.

John Ninfo is a retired bankruptcy judge and the founder of the National CARE Financial Literacy Program. Find his previous weekly columns on



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