There are any number of reasons why money becomes a problem, though they tend to boil down to two basic options: too many expenses or too little income.
Sometimes, however, neither is really the case. You make good money and you don’t think your expenses are unreasonable, but at the end of the month there’s nothing left over. You aren’t falling behind, but you aren’t getting ahead either. Something seems off.
So what gives? If you have plenty of income, why aren’t your finances coming together like you think they should? There are a few possible reasons.
You aren’t paying attention
It sounds simple enough, but many spending problems start small and then balloon over time because we just aren’t paying attention. When we have money, we’re much less likely to budget carefully or really stop to consider our purchases. Why would you, if you know you can afford it?
The trouble, of course, is that just because these purchases don’t cause us any pain at the time we make them, doesn’t mean they don’t eventually catch up to us. Today’s half-considered purchase is the reason there’s no money left over at the end of the month. Start paying attention by tracking your purchases. Review your spending regularly and ask yourself, “What of these things did I really need?”
Your wants are louder than your needs
You probably already know that smart budgeting requires the ability to separate wants from needs. The trouble is that this isn’t necessarily as easy as it sounds.
When we get used to certain wants, they start to feel an awful lot like a need. This is a power of a habit. Something becomes a part of your routine and you don’t just want it – you need it. This is why buying a $5 coffee at Starbucks by itself is not an issue. Once it becomes a daily habit, however, and it starts to feel essential, then it’s a problem and you need to work on rewiring your bad habits.
You’re overpaying for convenience
If you can afford it, there are quite a few things you never have to actually do for yourself. And if you’re interested in saving time, there are plenty of ways to spend money and save time. After a while, however, you may find yourself leaning a little too heavily on these conveniences, which can be financially distressing, even if you have the income to support it.
If you’re overspending on convenience, a good trick is to try and always remember what it feels like when you reach the end of the month and there’s little to no money left over. What’s that feeling? Disappointment? Worry? Anxiety? Frustration? Find that feeling and hold on to it. Then, when you’re trying to decide if you should eat in or dine out (for example), weigh those negative feelings against whatever momentary positive feelings you may get from taking the more convenient, but more expensive option. If the desire to stop feeling anxious about money outweighs your desire to not have to cook dinner tonight, you’ll find it’s much easier to make a change.
You actually can’t afford the things you buy
If there’s a danger to being financially comfortable, it’s how easily that can turn into financial complacency. When you have a more than adequate income, your sense of financial scale can be thrown off. You don’t hesitate to buy a brand new car with all the upgrades or buy a nice home on the good side of town because, in your mind, you can afford it.
But just because you have the money, doesn’t necessarily mean that you can afford it. There’s a reason nearly one-third of all lottery winners end up declaring bankruptcy – no amount of money is infinite. What you spend today is not available to spend tomorrow. That may seem obvious, but spending money has never been easier than it is today. You don’t need to hand over cash, write a check, or even swipe a credit card anymore. Unless you’re actively budgeting yourself, it’s very easy to get the wrong idea about your money.
The trick is to train yourself to see the bigger picture. A top of the line car may be affordable, but where else could some of that money be going? Try to understand what your financial priorities are and let those priorities guide you when spending money you could otherwise be saving.
You don’t know what you really want
Most financial problems boil down to this feeling: “I am Here, but I feel like I should be There.” After all, if you think things are fine as they are, then there’s no problem, right? But what if you don’t know what “There” looks like? What if you only know that “Here” isn’t cutting it?
That can be a very debilitating problem. It’s incredibly difficult to make positive changes when there’s no plan, and it’s even harder to create a good plan when there’s no goal. If you’re feeling stuck, a big part of that may be because you don’t know what it is you really want.
That’s okay, of course. But in the interim, you might want to consider creating a starter goal – something to get you moving, even if it ends up changing somewhere along the way. It can be small and short-term, but it should be concrete rather than abstract. Once you have a goal to work towards, some of these other problems become much easier to identify and manage. But it all starts with a goal.
If you need help finding your starting point, considering speaking with a budgeting counselor from MMI. We understand what it feels like to feel stuck, and we can suggest resources and next steps to start you moving in the right direction.