(Article by Lewis Schiff from ArmChairMillionaire.com, 25 November 2004)

My son has constant financial troubles caused by living beyond his means and getting over his head in credit card debt. He's sure that if he's just gets a higher-paying job that all his problems will be over, but he already makes a very good salary. How can I convince him to instill some discipline in his spending habits? --Chicago Mom

Dear Chicago,

From fast food to movies on demand to instant millionaires, we live in a world of instant gratification. With credit so easy to come by, it's a cinch to get whatever you want, now, and pay later.

As you know from experience, making more money is not always the answer. Your son's search for a bigger paycheck could easily lead him to a job he doesn't especially like. But more important, it will not solve the problem. After all, as the old adage says, it's not what you earn that's important, it's what you keep. This common sense wisdom was reflected in some comments we recently heard from members of the Armchair Millionaire community on this topic. Here are two examples:

"How much you earn won't impact your financial situation unless you change the bad habits that cause you to live paycheck to paycheck." --George, Jr.

"What you do with the money you have is more important than what you earn. You can earn a lot and spend a lot, too. You have to be able to save some of what you earn, no matter how much or how little that is." --Susie Q

Practicing delayed gratification is the key, of course--waiting until you can actually afford something to buy it. At the same time, life can be short and uncertain, which makes it easy to rationalize a "get-it-now" mentality.. The challenge here is in walking the fine line between the two extremes. My guide provides some basics on balancing out future financial needs with your current enjoyment of life.

The Armchair Millionaire's Guide to Balancing Today's Wants with Tomorrow's Needs

• Know what things really cost. The difference between a $15,000 Honda Civic and a $32,000 Ford Explorer is $17,000, right? Wrong. That extra 17 grand represents a huge opportunity cost. For example, invest that money in a stock mutual fund, keep it there for 20 years and earn an average of 9 percent per year on it, and you'll end up with a bit over $100,000. So when you consider that you might buy a new car every few years, choosing between an inexpensive economy model and a luxury SUV can actually mean choosing between a secure retirement and a not-so-secure one. Once you understand this, you may find that your current priorities change.
• Go half and half. When you get a raise, or start a job where you earn more than before, split the difference between your old and new salary: half for savings and half for spending.
• Splurge--on free stuff. It's really true that the best things in life are free. Cancel your trip to the mall and take your kids to the park. Those memories will last a lot longer than those designer labels from the mall will.
• Delay your gratification--but not always. Don't go so overboard that you completely fail to enjoy the fruits of your hard work today. As long it won't harm your long-term financial goals, treat yourself once in a while.
• Be more aware. Pay attention to the things you do for instant gratification. You may well find that you actually need to make just lots of small adjustments to your behavior in order to make a big difference to your financial picture.

THE BOTTOM LINE: Achieving a balance between getting what you want now and having what you need later can mean changing lifelong habits and ways of thinking. But the rewards in reduced worries and ultimately, a higher quality of life, are well worth the effort.