When I gave a presentation a few weeks ago, I talked about how people relate to their income level.\u00a0 I observed that people worry about money a great deal when their income is less than sufficient to maintain their lifestyle, but they focus on other things once they can generally afford how much they spend.\u00a0 But “lifestyle” is a very individual term, something that each person and family develops as a norm.<\/p>\n
This is from a manager’s point of view, and can be used to explain why people stay in jobs even though they might be paid more elsewhere.\u00a0 When an employee has “sufficient” income, he’ll tend to focus more on other factors.\u00a0 Relationship with co-workers now have more weight, as does the motivating factor of working on something that’s actually important.<\/p>\n
I also observed that many employees in the current economy have been forced to slide back into situations where they’re unmotivated and unhappy, just to maintain a satisfactory income.\u00a0 Or perhaps less than acceptable income.<\/p>\n
How would an employee use this information?\u00a0 In a growing economy, you’ll generally have the ability to move your lifestyle up during your lifetime.\u00a0 When you do that, you’ll feel relatively happy, even rich.\u00a0 You’re able to get a nicer car than you had before, and move into a nicer home.<\/p>\n
But this is a temporary effect.\u00a0 As soon as your expectations get adjusted to the new comforts, you’re not really any more satisfied than you used to be.<\/p>\n
And realize that adjusting your lifestyle back down can be QUITE painful.\u00a0 I’ve seen both good and bad examples.\u00a0 I’ve seen divorces ruin peoples’ lives for economic reasons, because they’re now trying to maintain two households with no additional income.\u00a0 Even worse is when people destroy their finances by attempting to maintain their lifestyle through debt.<\/p>\n
But I’ve seen a few good examples, too.\u00a0 I talked with a person last year who essentially “rebooted” her lifestyle after a job change, starting over again with fewer luxuries, lower obligations, and less debt.\u00a0 That’s pretty courageous, but it reinvigorated her spirit.\u00a0 She’s now focused on spending her life doing good for people rather than amassing a big pile of possessions.<\/p>\n
I’ve also seen people who had enough self-control to take any pay raises and put them almost entirely into savings and investments.\u00a0 They’re delaying the upward adjustment in lifestyle in the short term, to give themselves more cushion against risk.<\/p>\n
When I set out in my own business three years ago, this was a serious challenge for my family.\u00a0 It takes a long time to grow a successful business, so we had to decide which expenses we could reduce.\u00a0 And it’s generally been a healthy route for us, but now always easy.<\/p>\n
But if you’re going to adjust your lifestyle – up or down – do it with some forethought and intention.\u00a0 You’ll be happier.<\/p>\n
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