Today I’m really excited to have a guest post from Hannah Rounds! Hannah is a wife and mom who is working towards her version of the American Dream. This dream involves shifting her focus from career to family while creating opportunities for an encore career later in life. Her goal is to help other parents forage similar paths. She writes about this journey at Unplanned Finance.
Do you ever feel that if you were a more mindful person that all your financial problems would dissipate into a cloud of bliss?
Don’t worry, the problem isn’t you. Sometimes, despite your best efforts, the lifestyle you want simply will not fit in your budget. I know this because that’s where I am. I’m trying to leave my full time job to care for our son while my husband finishes grad school on a stipend of $20K per year. This is the framework my husband and I are using to redesign our lifestyle and our budget.
Is our lifestyle really well designed?
A well designed lifestyle starts with your hopes and dreams. Who do want to become? What lasting impact do you want to have on the world? What do you want your journey to look like? How you answer these questions will come down to your core values.
Your lifestyle should work in harmony with your budget, and by that I mean that the financial cost of your hopes and dreams is likely to clock in below the average median salary in the United States. When you think about it deeply, you will find that pursing what you value does not cost much money.
As a family, we’ve determined that we can pursue our core values for around $27K per year. I’m guessing that you could come up with a similarly small figure no matter where you live or what you value.
But life is more than lifestyle – we have obligations
Despite the fact that we need just $27K our desired budget is $35K. What’s with the 20% buffer? It’s “obligation money.” Obligation money doesn’t directly contribute to our current lifestyle, but we think we need this money to fulfill obligations.
Some obligations are well intentioned: investing for a child’s education or to care for yourself in old age, paying to visit aging parents, or helping a sibling pay for college.
Some obligations are social. You spend money to look and act a certain way that is accepted in your circle. You spend some money to host friends, to attend weddings, and to enroll your kid in a soccer league. You might travel to see family, or to exchange gifts on Christmas.
Some obligations just suck. You might pay high medical bills every year, or you may be stuck paying for past debts.
Are your obligations obligatory?
Question if these obligations are need to be part of your life or if you have the power to banish them (either temporarily or forever). If you can eliminate these obligations, but you haven’t, figure out why. I’m not saying you must banish all your obligations (we haven’t nor do we want to), but you may want to. You can pile on obligations to an infinite budget, it’s up to you to say no where you can.
If you can’t fit your lifestyle and your obligations into your budget, it’s reasonable to choose lifestyle first and obligations second. You can’t defer your necessary obligations forever, but you can for a limited time while you work on growing that budget.
Now Grow you Budget!
If you’ve designed your lifestyle and eliminated needless obligations, and you’re still coming up short then you need to earn more money in a manner that fits with your desired lifestyle. This requires understanding why you aren’t generating sufficient income. These are the broad problems I see:
- You aren’t earning enough per hour
- Your earning potential isn’t flexible enough
- You’re delusional from reading the 4 Hour Work Week
If you aren’t earning enough per hour.
If you are working enough hours, but you still can’t pay the bills, your goal should be to increase your earnings while keeping your hours the same. How can you do that?
1. Ask for a raise– If you pull comparable salaries and you’re at the low end, you have some bargaining power.
2. Increase marketing efforts to high potential clients. If you’re a freelancer, your goal should not necessarily be to pull in more clients, but to replace low paying clients with high paying clients. This requires marketing yourself well to the right people. Rather than picking up extra hours, marketing yourself and your work until people are banging on your door asking for you to work for them.
3. Consider a career change, but be sure you don’t market yourself as a career changer. If the specific work you do isn’t part of your aspirational lifestyle, find a higher paying job, and avoid working up from the bottom.
What you shouldn’t do:
Unless you’re in an extreme financial crunch don’t pimp for pennies.
When the problem is your hourly rate, adding low paying jobs actually serves to amplify the problem. Focus on building and marketing your skills and yourself. This is the key to sustainable income growth.
If your earning potential isn’t flexible enough
Earners that lack flexibility suffer a variety of symptoms: trouble attracting enough work, working unattractive hours, or feeling stuck in an all or nothing earning situation. Here’s what you should do in each case
1. If you’re having trouble attracting enough work, market yourself more. Marketing is hard and scary work because you face rejection, but people who market themselves more are more financially successful. If you don’t know how to market yourself, I recommend directing your focus on building your audience, this way you won’t feel slimy and self-promotional.
2. If you’re working unattractive hours you need to figure out why. It could be a function of your career choice, your seniority, or something else altogether. You need to diagnose the problem yourself and work to correct it. Define what attractive hours means then go after it. If you are employed by someone else, it’s worthwhile to ask for your desired hours. You may be surprised by how flexible your employer (or some other employer) is. If your hours stink and you work for yourself, you need to consider whether or not your career choice fits with your lifestyle choice. Don’t quit today, but recognize that your unattractive work schedule is interfering with your life, and something needs to change.
2. All or nothing earners face a tough situation because it feels uncommon for employers to work with employees to build in flexibility, but it is possible. Eliminating the all or nothing paradigm requires that you believe that you could change your situation. Would job sharing or part time work fit with your lifestyle? Would a bi-annual sabbatical or more vacation time or a work from home arrangement help? Maybe you just need a lower stress job. Once you know what you want, you can work to find employers that will build that into your compensations package.
Before you start looking at freelancing or entrepreneurship, remember that valuable employees often have a lot of bargaining power, and if you lack the willingness to ask, you won’t receive any special treatment.
If you’re delusional about a 4 Hour Work Week
If you are a person who believes that freelancing or lifestyle entrepreneurship could be ideal for funding your lifestyle, then listen to people living that lifestyle. The journey to sustainable freelance income is not easy, and entrepreneurship is a challenging lifestyle choice.
Go after your dreams with your eyes wide open. Lifestyle experts are trying to sell you a product, and they are not likely to be your most valuable resource as you start your new career.
I know a few successful “lifestyle entrepreneurs.” They have an enviable flexibility, but they are insanely hard workers who earn modest salaries. If you think that entrepreneurship is for you, then expect to spend a lot of time marketing yourself which is a form of working without pay.
Expect to work more than 4 hours per week, but don’t let the prospect of hard work dissuade you from chasing your career dreams, especially if flexibility is integral to your lifestyle.
What would you do if your lifestyle didn’t fit your budget?
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