by T. M. Meek
Financial__Math_of_Hope_vs_Despair_5_copyright_2010_TM_Meek.jpg (Images are available in full color in this article at AlexOpalstone.com)
[ 2011 Note: Although FICA has recently been a tax that is not required to be paid, how long do you think that will really last before it comes back in one form or another if it does not remain permanently removed as a tax requirement? Government has a history of changing things as a way to increase revenues.
Look at what happened with the 401(k). It started out similar to the ROTH and then got changed for the worse. And with excessive government debt and government spending on the rise and social security funds declining, although social security still needs to be paid to support current retirees, the ultimate solution for true financial security in one's near future and retirement years –– especially for the rising younger generation –– is the proper application of the principles taught in the Financial Math of Hope vs. Despair. See also the article notes link at the end of this article.
January 2013 Update: The taxes are back and paychecks are smaller. If that was never what you wanted, voting more wisely in the future can change it.]
All 100% of the income has been used and absolutely none of it has been spent frivolously. The budget proves that the income deficit begins to be felt at the point of housing needs and continues through all remaining basic needs––even when you are saving wisely. There is no money left over at all for spending money on fun or debt or generous charitable giving and there is definitely no money available to appropriately provide for another person––no matter how much you may love him or her. This is no way to live. This is not living the American Dream.
So just how much does it take to really make it and prosper?
Is there any way at all to make $75,000 gross income per year work for just one adult? It might work if everything goes perfectly in life for you. If you never lose your job, if you never get into any debt, if you never have any unplanned major financial crisis needs (never get sick, never get pregnant under an insufficient plan for income, never have property damage or transportation problems etc.) it might work. Just never become a negative financial statistic. (But the odds are against you and most everyone else that way.)
By the way, did you notice the catch-22 about using 5% to retool? If you use the 5% well then you'll earn more money to distribute to other parts of your budget but your taxes may go up. On the flip side, it can take awhile to realize the increase in income needed to truly be financially self-reliant long-term. Unfortunately for most people, they just aren't saving as much as they need for emergencies or retirement and they're certainly not using enough money to even learn what they need to become truly financially self-reliant.
Most people don't even earn $75,000 and the few who do––including many so-called financial experts––are using the money they should be saving and instead putting it towards housing, furnishings, clothing, transportation and entertainment that is more expensive than they really need. But remember, even when $75,000 is earned and used extremely frugally it still won't be enough to cover basic needs after appropriately paying yourself first through wise saving and investing.
So what do you do? Here's where this information is especially helpful for the younger rising generation: DON'T CHOOSE A CAREER THAT WON'T PROVIDE A SUFFICIENT INCOME FOR YOUR NEEDS. As you'll soon see, if you're not choosing honorable employment that pays you a minimum of six figures per year, you won't earn enough to get ahead of the emergencies that so often cost us our current and future security.
Is current financial security and preparedness for emergencies a true need? YES!
Is saving wisely for retirement so you can have the money needed for increased medical needs and to fulfill any dreams to volunteer for charity as gifts of time or the desire to have enough money to be able to spend time with family in your last years of life––are these all true and worthy needs? YES!
For those who have already graduated from college, keep working at whatever honorable employment you have and use whatever money and resources you can to find a better career. If you have to go back to school to earn a degree that will earn you six figures (which is what the average adult needs to earn in order to truly prosper and give more generously to their favorite church or charity of their own choice) then do so.
Research and study the jobs that bring in a generous six figures of income that also make the world a better place. Choose work that can best utilize your own God-given talents so you actually enjoy the work that you'll do. Then give back by donating generously to charity and teach and help others to do the same.
Some people have a personal goal to give the first ten percent of their income to a church or charity of their choice. What will these people need to earn for real financial self-reliance to successfully do that? What is some good counsel to make that happen?
Luke 14:28 of the King James Version of the Holy Bible gives us guidance from the Lord Himself when He said: "For which of you, intending to build a tower [for example, of true financial self-reliance], sitteth not down first and counteth the cost, whether he [or she] have sufficient to finish it?" Just as we each need sufficient faith and good works to obtain personal salvation, we each need sufficient faith and good (including smart) individual efforts towards long-term, lasting financial salvation––ideally in a way that blesses not only our own lives but the lives of those around us. (The Financial Math of Hope vs. Despair is continued on the next page. See next image.)
