Friday, May 24, 2013

Spend More to Make More?

This post does not follow any logic that I've ever seen in the PF blogosphere but I think there's truth to it.

My hypothesis: People who spend more make more money because they need to fuel their expensive lifestyle.

I firmly believe this to be true in many cases. Many people who have a ton of toys and an overall expensive lifestyle find a way to make more money. They aren't willing to be satisfied with a small salary. They want to get promoted or will ask for a raise. Many of these people are attracted to professions where they can make a lot of money, often by commissions.

If they were willing to budget and be satisfied on a small salary, they wouldn't have the inner drive to push harder to make more money. I feel that this statement most often goes against PF logic. I think that too much emphasis is put on proper budgeting within your current income and not enough focus is on making more money.

I have most often had commission jobs and some of the people who make the most money are those who have the most extravagant lifestyles. They need to push as hard as they can to pay for their boat, sports car, golf membership, lake house, expensive shopping habit, and who knows what else.

I realize that this doesn't sound very financially responsible and it isn't to a certain degree. What do you think? Think I'm smoking crack with this one? Do you know of someone who falls into this category?

8 comments:

  1. What you highlight here is true. They basically have the drive and some form of motivation to make more.

    I guess the real problem with this for most people is that they are forced to make more money and work harder. If they are doing it by choice, that's excellent; but I doubt most of them are.

    I don't think that lifestyle is wrong per say since they aren't doing anything illegal. I think everyone just needs to know what they want and what works for them.

    ReplyDelete
    Replies
    1. Rafiki, yes, this lifestyle would be so stressful. Because of their huge expenditures, they lose flexibility in regards to their entire life.

      Delete
  2. I see this with DH's job (commission). Once the guys earn an office their earnings go up. The consequence of not earning the minimum is $600/month payment for their office. I also see people encouraged to get married, have kids, and get big houses. Having a family to take care of is a big motivator to keep working hard.

    The trade-off is that they reach the tipping point eventually. They've worked hard and built their business over several years, so there comes a time when they can make the choice: keep working at that level and make an excess of money which buys choices for your family, or back off work a bit and have more time with your family while still covering all of your needs & wants. It's not that money buys happiness, but it gives them the option of choices. I've seen people continue to work and earn a couple million a year. And I've seen those that are content with $300,000 and spend every afternoon with their kids and coach little league.

    But the real test is do they have what it takes to put in the 90+ hour weeks for the first ten years? Do they have that internal drive to get up & go to work early and stay late, knowing that they may not get a check for several months or even a year or more. No one is driving them - they have to have their own motivation. The ones who can't cut it leave to go to other firms that will make a salary or find another line of work.

    ReplyDelete
  3. Makes total sense to me. I increase my expenses all the time just to motivate me to find new ways to build wealth. A few years ago I was only spending about $2,000 a month. Last year I spent $2,500, and now I'm spending about $3,000 a month, which is quite a lot considering I'm single. Eventually my lifestyle will probably demand I make at least $5,000 a month just to get by haha. I know my income wouldn't be as high as it is today if I had not invested the time, effort, and money into buying luxury items to encourage me to bring in more money :D

    ReplyDelete
  4. You might be right, but it sounds like a kind of trap to me. I must keep running faster and faster and faster, because if I don't, I'll fall down (if you get my analogy). It's often these people that suffer most when life hands them lemons (like illness or disability), because they have counted on their ability to earn earn earn to get by, and if they can't, it's not a pretty picture.

    ReplyDelete
  5. I agree with you. I just wouldn't have the nerve or the stomach to live a large life style. I would be too afraid that my commission check wouldn't cover my toys.

    ReplyDelete
  6. Um...yeah, this theory sounds a bit out there. People with a lot of money do spend a lot of money, that's for sure.

    ReplyDelete
  7. I think your theory makes sense. However, while neither I or my husband work a commission based job, we have taken more intense jobs in the past two years as our children have moved on to life on their own. We make more money now than ever before, but we are still committed to living the same lifestyle. We really enjoy our work and are pleased to have this opportunity to push ourselves to another level within our fields without having to plan around the needs of our family or children. Perhaps we're outside the norm.

    ReplyDelete