HOW DO YOU SPEND YOUR TIME?

Finding balance when it comes to your financial health and well being can be – well, a real balancing act. When striving to settle into a happy medium between what you need and what you want, there is always that pesky factor of how much you earn and how much you spend, or save, as the case may be.

With credit card debt and bankruptcy on the rise, it seems that too many of us aren’t being realistic about what we can afford to spend on the things we want. If you’re spending more than you earn (translate: you are carrying credit card debt from month to month and never see a zero balance on your statements) you may be heading for big trouble.

Learning to live within one’s means can be difficult, but it’s not impossible. Just stop thinking in terms of dollar amounts and start thinking in terms of self expenditure. Get your pencils out – we’re going to work a few math problems.

First, add up all of the income in your household. You can do this in two ways: Use the adjusted gross income figure from your most recent tax return, or add up the hourly wage of all wage earners who also contribute to living expenses (in other words, don’t count the income of kids or adults who don’t pay bills). I prefer the adjusted gross income because it will give a much more accurate picture of what you really have to work with. Divide your number by 52 – the number of weeks in a year.

Now add up the number of hours everybody works in one week. Divide the previous amount by the number of hours worked. The result is your household hourly wage.

Here’s an example: John Q. Office and his wife Suzy show an adjusted gross income of $52,895.00. John works a typical 40 hour week, but Suzy works part time with flexible hours and averages about 18 hours a week. However, she is also self employed as a bookkeeper and puts in approximately 10 more hours a week keeping her clients’ books. Their total weekly hours are 68. Their adjusted gross income, when divided by 52, totals 1017.00 (rounded). Their combined hourly wage based on the money they actually take home is about $15 an hour (1017 divided by 68). Remember, this may not reflect their actual hourly wages and may not be 100% accurate, but it is a good indicator of their work to earnings ratio.

You may not fit the picture of traditional wage earner(s). Maybe there is income flowing into your household that for any number of reasons, isn't reportable (such as child support). Maybe yours isn't a 40-hour week. Maybe you have the ability to work overtime for extra income. Just do the math - figure out what is coming into the household and how many hours you and others are working.

So, once you have your hourly "wage" what does it have to do with thinking in terms of self expenditure rather than money? That’s easy. Spending money takes on a whole new energy when you start to think of it as spending time at work. Think about paying for a large purchase, say, something that costs you over $100. Maybe you have the cash on hand or maybe you put it on a credit card and pay it off in 3 or four payments.

Instead imagine that when the total is rung up on the cash register, what you see isn’t a dollar amount but the number of hours you worked (or, worse, will have to work) to pay for your purchase. Your $100 item is going to cost you almost seven hours of work. In history, they called this servitude, slavery and bondage. Ouch!

Okay, it’s not that bad – after all, under this system you are in servitude to yourself, and therein lays the beauty – you have the power to determine how much of your time and self you will expend to have the things you want. Maybe that seven hours is worth the pleasure and or convenience you will receive in return. Or maybe, if you calculate that a new wide screen, flat panel television is going to cost you 165 hours of work, you might find yourself thinking that your favorite shows look pretty darn good on your old 27 inch model. If you or your spouse have to work overtime (translate: spend additional hours away from the family), do you really still want to buy those black leather italian boots?

If the desire to accumulate new and better stuff in the pursuit of happiness is just human nature, how can you know when enough is enough? Just ask yourself how you want to spend your time.