How much am I spending?
The answer is a number: my salary. This is both easy, and very difficult. It’s easy because I should be spending NO MORE than my salary. It’s difficult because many of us want to spend much more than our salary. There’s a thriving industry based on lending us money to do just this. And many thousands of us are in financial trouble because we have too much debt. Again: I should be spending NO MORE than my salary. Let’s see this as a balance:
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SALARY = SPENDING
If we can always keep this balance horizontal (think of a seesaw in a park) we should not get into financial trouble. Indeed, if SPENDING is less than SALARY, we are saving money – we’re not just keeping out of trouble, but we’re thriving. My goal in this series of blogs is to get you thriving! Focus now on the SPENDING part of this balance. Your spending starts with company deductions like tax (even before you receive your salary); then there are fixed payments made by your bank (like store accounts) and by yourself; and finally there’s the money left for you to spend. So what is available for you to spend is not your salary (surprise!), but your AVAILABLE SALARY.
Let’s create another balance:
AVAILABLE SALARY = SALARY minus COMPANY DEDUCTIONS minus PAYMENTS MADE BY YOUR BANK & OTHER FIXED PAYMENTS
In the coming weeks, we’ll look at the idea of AVAILABLE SALARY in more detail.
On what am I spending this money?
Pause a moment to note that the question in the title here is NOT How much…? The question is On what….?
Aah, there isn’t an easy answer to this. What works for a single person with no dependants, will not work for a married person with six children, and will not work for a pensioner couple. The beautiful challenge is for you to apply your mind to your own situation, and to use the information in this My money, my business, my life series to tailor a solution for yourself. Be cautious.
Managing money is a very long-term project. You don’t want to discover that you’ve missed spending on something important (like retirement) when it’s 40 years too late (see the calendar/table above). You have only one life.
Later in this series, there will be a topic on what I call a troubleshooting budget. This will help us to see how we ‘distribute’ our spending, and question whether we are doing it in the most appropriate way.
Wow – make that double-wow – I hope you are catching my enthusiasm!
Jay Pillay’s first two critical decades were spent where his first decade began – in Pietermaritzburg. After studying at ML Sultan Technikon in Durban (anyone remember that place?), he then joined the sugar industry, working in Tongaat, Durban, and Xinavane – a sugar mill village 120km north of Maputo. Oh yes – there was a brief period of unfaithfulness, when he flirted with aluminium in Richard’s Bay. Upon retirement, he and his wife Dorothy – settled in Southport.
Jay began writing about salary management (for ordinary people living on a salary) in the early 2000s. Many of his articles were published by The Ripple Effect, a Durban-based corporate newsletter. In all his writing, Jay says he attempts to emphasise the big picture in salary management: it’s not just about making it to your next payday – it’s about making it to the end of your working life. It’s not just about your working life – it’s about your retirement too. It’s not just about the cost of living – it’s about the cost of dying too. It’s not just about you as a salary manager – it’s about your dependants too.
This 16-part series is being published here for the first time. It would be invaluable for salary managers in the early years of their lives – who realize that salary management is a lifetime business. Finally, it’s not just about reading stuff on salary management – it’s about careful thought (that means time, well invested), and then taking appropriate action.
There’s a second finally. To daughter Nikki, thank you for the picture.
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