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Your raise won’t help

This is the first rule I remember creating and it has stuck with me ever since. Every year I see more and more examples of its truth, and see applications of it in many other areas of my life besides finances. It has helped me frame many of our financial decisions and I have passed it along to probably more people than would like to hear it. In that vein, I hope it can help you out too.

If you can’t live on what you make now, you can’t live on more.

It came from a pretty simple observation that there are only two types of people in the world; those who spend more than they make and those who spend less. If you happen to be one of those who spend more then you will continue to spend more no matter how much your next raise is. Its your habits that are the problem, not your paycheck. On the other hand, if you are spending less than you make you are probably well on the way to financial independence. And aren’t those raises so much sweeter when you know every extra penny is free money to do whatever you want!

P.S. Yes I know there are exceptions to every rule. If your reading this, your not the exception.

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