Money is a boundary in life. In fact, as adults it is one of life’s biggest boundaries. It defines who you are in society. It tells you what you can and cannot have or what you can or cannot do. It is a structure that governs your very existence.

I have heard many psychologists say that if a child is not provided with clear, definitive boundaries of what he or she is not allowed to do, he or she will grow up confused and maladjusted. A child actually finds security in knowing exactly where the limits are so he can function within them. If they cross the line and are promptly reprimanded, they can then jump back again and things are copacetic.

Most of us have learned to live within boundaries: first at home set by our parents, then at school set by our teachers. Later in life, it is usually a job and a boss who set the boundaries.

Money is a definitive boundary. If you make $50,000 a year, it sets the limit of what you can do. It says what type of car, what size home, what quality clothes you can enjoy. If you are like most people, you quickly learn to live within this boundary. If suddenly, you get a $15,000 a year raise, within a year or two you probably will be living at the limit of $65,000 per year.

In the mid 1970s, I used to teach financial management to graduating seniors at Southwestern Medical School. Quite often, a student would become a client a few years later. The transformation from the first year in medical practice to the fourth or fifth year never ceased to amaze me.

I remember young doctors just starting out in practice. They would say, “As a student, I’ve been living hand-to-mouth for the last six years, and I can’t believe I’m going to earn $50,000 my first year (remember, $50,000 around 1975 was a good income). I’ve dreamed about having this much money for so long.”

In the second year, their income went up to $90,000, and shortly thereafter, their lifestyle expanded proportionately. The third year they were making $120,000, the fourth $170,000 and the fifth $225,000. What was amazing was that by the sixth year they couldn’t live on $200,000 a year.

What happened? As their income increased, they quickly learned to live within the boundaries of their money.

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My research projects on money and lifestyle over the years show that a couple who earn $75,000 a year in this country enjoy the same basic lifestyle as one who earns $275,000. Impossible? Let us see.

A person who earns $75,000 a year drives a luxury car equipped with cruise control, an am/fm/cd stereo, power windows, door locks, automatic trunk release, tilt wheel and climate-controlled air conditioning. They are driving a fully equipped $30,000 Chevrolet. The person who makes $250,000 a year drives a similar car with exactly the same options, but it has a star within a circle as a hood ornament. It is a $75,000 Mercedes Benz. Multiply this difference by two cars.

Both couples dress nicely. At a cocktail party you will notice that the $75,000-a-year couple are dressed in a $250 suit and a $300 cocktail dress. The other couple are also there, but the man’s suit cost $1,200 and the woman’s dress $2,500. To observers in the room they both make stunning couples. Multiply this difference by two wardrobes.

Both these couples live similarly in their homes. Both have kitchens with all the modern conveniences, but the $275,000-a-year couple’s breakfast room is four feet longer and two feet wider than the other couple’s. They both have nice master bedrooms that accommodate a king-size bed, two nightstands and dressers. However, one is 13 by 15 feet while the other is 16 by 20 feet. In the master bathroom, one has a sunken man-made marble tub that cost $600, the other a Venetian marble tub that cost $6,000. One home has 2,700 square feet of space and costs $225,000; the other is 6,000 square feet in size and costs $850,000.

When is enough, enough? I can remember when my wife and I moved into the new home of our dreams. The living room was 30 by 50 feet. It was a couple of hundred feet from our bedroom to our children’s bedroom. We felt lost. Within a week we were afraid that we had made a mistake, that it was too big to be comfortable. Within a couple of years, it was not big enough, so we added on.

Money is indeed a boundary!

Read more about Jody Tallal, a pioneer in the financial-advice industry, in the WND story announcing his new column.

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