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Do I need to make more money?
by Diane Conlinn
December 21, 2000

Quite a few years back, I was reviewing my income, and I decided that I didn't make enough money, and that all I needed to really make it would be to make $12K a year. With that wealthy amount, I could pay my bills, my rent, and be able to buy new clothes, and keep my car fueled.

Nowdays my dreams are just a tad bit loftier, and today I believe I finally reached the salary level that I dreamed about years ago. So how do you know how much you need to live, as opposed to how much you want to live.

If you have been tracking your expenses you know how much it costs to take care of your regular expenses. Next, I recommend you figure out whether you are saving enough for retirement. The msn site has a channel that focuses on money, and there are resources listed there. Using their calculators and wizards,, it is possible to figure out how much you should try to save for retirement. In addition, after you have figured out your living expenses, take that number and times it by three, that figure is what you should probably have in a contingency fund. Next do you want a vacation? How about a savings fund for that? And what about those periodic expenses such as gifts, license fees, insurance renewals, registrations. After figuring out a reasonable savings goal each month, figure out how much money on top of your usual living expenses you should be making.

For example, person A's living expenses add up to
$2,000 Monthly Living Expenses, Food,Debt Repayment, Shelter (Rent or Payment), Utilities, personal care, health care, car payment, etc.

Their retirement goal is $800K by Age 75.

Their contingency fund amount goal is $6,000 (3 times monthly expenses).

Their vacation for two weeks is estimated to cost $1000. Their periodic expenses add up to another $500 a year.

So their initial savings goal is $7,500. Trying to reach this goal in 6 months might be unreasonable. But over a period of three years, it might not be so unreasonable.

So, lets add on another $2K for vacations over the next three years and $1K for expenses. And our savings goal for the next three years is $10,500. So a savings goal of about $300 a month is a reasonable figure.

It is one thing to calculate such a goal but we haven't even discussed other goals such as retirement.

We can talk about ways and means regarding that in our next article. So, where do we find an extra $300 a month. If you aren't taking home $2300 a month, you can probably say you don't make enough money. This is where I say to you to say YES to money.

No matter how small an amount, I urge each of you to set aside at least $5 a month in savings for this goal. If you have an IRS refund coming in, apply a third to this goal you have for the future.

When opportunities to make extra money, perhaps selling old used items, or someone offers you a job typing their resume for $50, take the offer and apply that money to your fund.

The next thing I am going to suggest is to treat the savings like a bill, and make sure the account is across town and not readily accessible to you. If you have to mail your deposit, so much the better. This will keep the temptation to spend the money in an "emergency" situation, such as you've run out of gas money or something.

True emergencies are things such as you lost your job, you must fly to your family 500 miles a way for a funeral, etc.

If you get a job increase, allocate that new increase using the 1/3, 1/3, 1/3 rule, alloting 1/3 to the past debts, 1/3 to present needs, and 1/3 to the future, your new savings goal. You might be surprised how many small windfalls come up during the year. Even if it's a check for $10, apply this rule, and before you know it your nest egg will have grown surprisingly.

Thanks for listening. This has been a continuing article in Learning to Live Without Debt.

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