Part 2/10:
The first hard truth to digest is that having money in the bank does not equate to true affordability. Many people fall into the trap of overspending on larger homes, nicer cars, and lavish holidays, simply because their income allows for it on paper. However, one must consider the secondary costs associated with these choices—higher mortgages, increased insurance, and other upkeep expenses can rapidly inflate your budget.
To mitigate financial strain, it is crucial to maintain headroom in your budget. This means being diligent in crunching all relevant numbers before making big financial decisions. Not only should you evaluate whether you can afford a purchase, but also reflect on why you wish to purchase it in the first place.