Harry Pitts argues that more money won't fix bad spending habits. Without discipline and clear boundaries, higher income just lets you make bigger financial mistakes. He asks four questions to help you assess your financial health: how many weeks of bills could you cover if income stopped, what's your emergency fund, where's your biggest spending leak, and what scares you most about money.
If you earn more, your margin should grow, not your lifestyle. That's good. Oh man, I just heard it get quiet out there. If you earn more, your margin should grow, not your lifestyle. Higher income does not remove the need for systems. You have to have structure. You have to have systems. You have to have boundaries. When you go outside of the boundaries, you create stress. Higher income does not remove the need for systems. It increases the consequences of unsupervised spending because of bigger spending commitments are harder to unwind. So this applies to everyone, me included, not because everyone is broke. Let me explain that we're not broke. We need systems because everyone needs structure, systems. Question number 1, if your income stopped today, how long could you cover basic bills? If your income stopped today, can you cover basic bills 0 weeks, 1 to 2 weeks, 3 to 4 weeks, 5 to 8 weeks. 9+ weeks. Question number 2, do you have an emergency fund right now? The first answer is no, I do not. Do you have an emergency fund under $500? An emergency fund between $500 and $1,000? An emergency fund from $1,000 to $3,000? Do you have an emergency fund over $3,000? These are simple questions. These are not asked to embarrass anyone. Question number 3, where is your biggest leak right now? Is it food? Is it subscriptions? Is it impulse spending? Helping others beyond your capacity? Is it debt payments? Or is it other? Is it so much— when I say other, is it so much that you just don't even want to answer, or it's too painful for you to answer? Question number 4, what is your biggest fear about money?
