How Realistic Are Your Financial Expectations?

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This week I removed myself from a Facebook group.

This particular group has lots of posts showing off the posters’ recent splurge purchases.  Designer watches, bags, clothes, plastic surgery, and extreme luxury holidays.  I’m not quite sure why I signed up!

You are heavily influenced by the people you surround yourself with.  When exposed to these sorts of daily exposures, expectations gradually change. 

Expectations of what you can comfortably afford become inflated, sometimes to ridiculous levels. 

Do you aspire to become a semi- bionic – collagen plumped mannequin body with a handbag you’d risk your life for in a robbery?  That’s a personal choice, although I suspect it’s fueled by horrendous self-esteem and inferiority issues.  And your Instagram account. 

Financial Expectations: You Can Afford Anything but Not Everything

To a far lesser extreme I see this among colleagues and friends.  Common defences include “You can afford it,” “You deserve it” “You only live once” and the ultimate lie “It’s really an investment!” 

In the clever words of Paula Pant, “You Can afford anything…But not everything.” 

Are designer consumer goods really what bring you joy?  If you have retirement plans and other financial goals on track, go for it! 

Very few people can literally afford everything. There has to be a choice.  If you’re not making these decisions consciously, you are still making them with the purchases you make. 

 

Make Sure Your Financial Great Expectations are Realistic

Many reading this blog have, or will eventually have a high income, due to their professional career: Medicine, Dentistry or otherwise.  Your generous income may make you feel wealthy and prompt an urge to show off. 

But wealth does not come from income.  Wealth is built from the gap between your income and expenditure.  Some of your colleagues come from wealthy families.  Some may have graduated from medical school debt free and have received large financial sums as gifts or inheritances.

Expecting to live the same lifestyle as these colleagues is not realistic for most.   Don’t be fooled into emulating the Instagram lifestyle (it’s not real!). 

Think about your situation, your long-term goals, and avoid short-changing yourself for frivolous spending to keep up with the Jones’s. 

financial expectations

Comparison is the Thief of Joy – Theodore Roosevelt

Don’t be fooled into comparing yourself with seemingly wealthy friends. 

Maybe they come from wealthy backgrounds.  Maybe they can’t sleep due to financial stress with credit card companies calling day and night (Shudder….). 

Comparing your own life with the “Highlight Reel” of others on social media is a particularly easy trap to fall into. 

No-one posts photos of mundane, every day.  Those idyllic households with Instagram-worthy good looks, interior designed homes and angelic children?  Is it me or do these couples frequently announce their divorce within weeks of these images being published?  Maybe they’re trying to fool themselves their lives are perfect.   

Most importantly, don’t fall into the trap of feeling sorry for yourself. 

Your exact career choice may not be as lucrative as some of your friends, and you weren’t given a giant head start by wealthy and excessively generous parents.  

 

You Already Won Lotto

Readers who are lucky enough to live in Australia have literally won the lottery of life. 

This great country goes from strength to strength, and has a promising long-term future. 

Incomes are comparatively high and living costs reasonable (mostly).   Healthcare is available for all.  The social welfare system means if everything goes wrong, you won’t starve. 

If you are earning over ~$90,000  your income is above average in Australia.  (Intern docs, your wage will increase above this within two or three years.)

You have been provided amazing opportunities to secure a secure, luxurious and happy future.  But you have to do some work to achieve everything you want!

In most places I’ve worked with there are nurses who use casual work to fund months off work traveling the world each year.  I suspect nurses have a lot to educate doctors with in money management (and many other topics)!

If you are a doctor wondering how you can manage with your income my suggestion to take someone you know who does this out for lunch and ask to pick their brains! 

financial expectations

Adjusting Financial Expectations: Practice Gratitude

It is now well established that gratitude is beneficial to your mental wealth.  It’s just too easy to fall into the trap of wanting more and more and more, but never being satisfied. 

Being content and understanding when you have enough is a rare skill.  It has to be developed over time through practice. Starting a gratitude journal or regularly finding someone to be grateful for at work  will have a positive effect on your mood and sense of “enough”.   

financial expectations

Why Adjust Financial Expectations? Future Changes of Heart

What if the opportunity of a lifetime popped up?

Once you have all the trappings of middle-class life, impulsive life changes become harder.  Heading to Antarctica for a year as the expedition doctor, or taking your family for a world tour while home-schooling can seem impossible. 

It’s never really impossible, of course, but there are a lot more real and psychological barriers to following your dreams. 

If you own a big fancy house with the most expensive furniture and latest gadgets, are you really going to want to rent it out to strangers?  How much damage will be done?  It feels very personal when it’s your own home. 

What would you do with your cars and boat?  If you still owe money on a recently new car, you may not even be able to sell your now second-hand car for enough to pay out the loan! 

I value maintaining flexibility.  And as I get older, the idea of reducing my possessions appeals.  I aspire to owning less clutter and having more freedom. 

If you have trapped yourself into a huge mortgage and car payments, you have locked yourself into “Golden Handcuffs”. 

The opportunity to change careers or undertake a fellowship is severely impacted by financial implications.  Taking extended time off work if a family member is seriously unwell is not a viable option. 

You are essentially betting on your high income continuing without interruption, and that none of your life circumstances or aspirations will change. 

Life changes pretty fast sometimes, I’d rather be ready for whatever opportunities and difficulties are thrown my way.    

Model Reasonable Financial Expectations for Your Kids

I have a friend with kids of similar age to mine.  We have exactly opposing views of teaching kids about money. 

Her concern is that the kids will worship money if taught it is important.  She ignores money when it comes to her kids, and tries to pretend it doesn’t exist.

People all around us appear to worship money as the ultimate goal, going to jobs they don’t particularly enjoy to buy rubbish they don’t need to show off how much money they have.  Oddly, these same people who usually claim money isn’t important whilst spending the majority of their lives chasing it. 

Money is important – it provides for all our needs such as food, shelter and safety.  Financial security provides opportunities for designing your life around your values and what you enjoy. 

Give Direct” is a charity I support that provides financial support directly to some of the poorest households in the world. $1000 can double a household’s income, allowing the family receiving support to use the extra fund to break out of the extreme poverty cycle.  What an incredibly powerful use of $300-540 after tax!

Only great privilege would allow you to forget that money stops people starving to death. 

Parenting is teaching children all the skills they need to become responsible and happy adults. 

They need realistic expectations and to handle a budget.  I hope financial literacy will help them avoid all the usual financial mistakes of youth

If parents are planning to provide them with financial assistance for a head start, this is even more important! 

So...

It will take time to reset your financial expectations.  Friends, family and society are constantly reinforcing “You can afford it”.  Broaden your social circle from high income earners who have picked up bad habits!  Look carefully for those around you who are money work from them, pay for lunch and ask them if they’d share some secrets.  Most importantly, make sure you fund what is really important to you as a priority.  Don’t buy stupid crap until you have the big rocks in the jar.

Aussie Doc Freedom is not a financial adviser and does need offer any advise.  Information on this website is purely a description of my experiences and learning.  Please check with your independent financial adviser or accountant before making any changes.

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