If one positive thing comes out of these last two years (2020,2021), it will be the importance of work-life balance. We have all experienced the shift in our lifestyles with working from home, online learning, and a lack of social activities. At some point over these last two years, most people have experienced some form of burnout, stress, anxiety, and overall frustration. People are focusing on their work-life balance and ensuring they can find time to get away and relax. One thing that is not being talked about is the need for a financial life balance.

What exactly is financial life balance?

I am sure you have heard it by other names over the years, such as balancing your checkbook or the dreaded “B” word of budgeting. No matter what you call it, the point of financial life balance is to ensure that you can support the life you wish to live financially. It is not about cutting out activities or not having a social life; rather, it is about ensuring that you can support the lifestyle you want and need. In the end, no matter what your lifestyle activities or choices are, we all want to know that we are financially secure enough to have the lifestyle we want today and in the future. Learning how to balance your finances and your life is critical to meeting this ultimate objective.

Why is it important?

If you can’t find financial balance in life, you could end up taking out large amounts of consumer debt to fund your lifestyle. Consumer debt attaches itself to us like a ball and chain, slowing down our lifestyle and limiting our ability to have balance in our lives. How is this possible? When we take out a loan or make a large purchase on our credit card, we now have an obligation to pay back that debt in monthly installments. Instead of having the $50 or $100 a month in cash to spend as you wish, the money ends up going towards the loan or debt. If you end up missing payments or pay the minimum amount, that debt can stay with you for years and could cost you twice as much overtime when you factor in the interest paid. In the end, that is all money that could have spent on your life activities.

Figuring out your balance

Determining your balance is not about spending money, it is about understanding where your money is going and making sure it is going towards the right things. What is right for you can and likely will be different than what is right for others; there is no right or wrong answer here. Some people will spend their money primarily on electronics, others on entertainment, others on vacations, others on cars. The main point is to not spend your money on items that you could live without or are not as important as your primary goal. It is about weighing the options of where you would rather spend the money. For example, would you rather buy that new phone or go on vacation? You cannot have both without going into debt, so which one would you rather have? Perhaps you will forgo the phone for the vacation and get a new phone in 3 years when it is more important to you. That is what financial life balance is all about.

When you start out, you might have to pass on a lot of items to get those few things you really want. However, over time, you will find ways to increase your financials to open up new opportunities in life that you did not have before. Focus on what is important now and ensure you are maintaining your financial life balance.