I want to emphasize the importance of something I’m sure Jesse has already mentioned on this blog and that is this:

In the event that you are given a raise, don’t let your standard of living rise needlessly to the level of your new income.

The wisdom in that counsel has hit home recently (literally). As those of you who have read my introductory bit on this blog may know, I just had a baby, which fact is related to the bolded statement above because as we’ve waded through all of the baby-related expenses, (and they are many), I’ve had several occasions to think to myself, “I am so glad we’re not living at the edge of our means.”

My husband took a new job in February and where money had been pretty tight before then, we suddenly found ourselves with a few unassigned dollars at the end of our budget pow-wows. UNASSIGNED DOLLARS!? What ever will we do with them we asked each other in slack-jawed disbelief. The possibilities! We spent some (new blinds, dentist appointments for all (!), a new bookshelf), but mostly, we just tucked those dollars away for what we knew was coming. What we were careful not do was increase our fixed costs. We didn’t sign a cable contract. We didn’t strap ourselves with a monthly pest control bill. We didn’t join a gym. And looking back, we’re glad we didn’t, because adding to the family a person who goes through a dozen diapers a day has brought us almost up to the edge of our income again. Almost. (Bear in mind that a certain percentage for savings is always the first to come out of the pay check, so when I say we’re back at the “edge” of our income, we’re at the after-savings edge.)

We’re seeing on a national level the consequences of people extending themselves to the nethermost reaches (and beyond) of their income — people living so close to the edge of their means that increased fuel and food prices (and interest rates) put them in the red (or further therein as the case may be). Not a good place to find one’s self.

Please don’t misconstrue what I’m saying to mean “consign your soul to a life of depravity.” That’s not it. Just be wary of needlessly increasing your fixed costs. In a nutshell, it’s a seductive temptation to increase your standard of living right along with your income at every raise; resist that temptation. Even if you don’t have another little human on the way, life will provide you with unexpected costs aplenty. And if it doesn’t, the peace of mind that comes with the “just in case” money will bate the sting of luxuries foregone.