If you are having problems making and keeping money and want to know what’s causing your money troubles (and more importantly, how to fix them), you are in the right place.
I wrote this article because there was a time when I felt that it was impossible to get ahead and money seemed to slip through my fingers almost as soon as I got it. The few days before each paycheck I would be panicking because I was almost out of money and wasn’t sure how I would make it until the next payday. I still vividly remember that feeling of being short on cash all of the time.
If this sounds familiar, then I think this article is going to provide you some useful advice to help you troubleshoot your financial issues. It’s absolutely possible to climb your way out of a rut (I know that from personal experience) and achieve lasting financial stability and growth.
In this article, we are going to discuss the key reasons why money is so hard to get and some practical tips on how to improve your financial situation. We’ll go into each of these reasons in more detail below, but in short, there are five reasons why you may have difficulty getting money in your life.
- Your Income is Just Too Low
- You Can’t Seem to Control Your Spending
- You Have Overwhelming Debt
- Unexpected Expenses Throw Your Life Into Chaos
- You Don’t Have a Clear Picture of Your True Financial State
We’ve got a lot to cover, so let’s get into it!
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The information contained in this post is for informational purposes only. It is not a recommendation to buy or invest, and it is not financial, investment, legal, or tax advice. You should seek the advice of a qualified professional before making any investment or other decisions relating to the topics covered by this article.
Your Income Is Just Too Low
If you are struggling with money, one of the most likely reasons is that you just don’t bring in enough income to make ends meet.
There can be a lot of reasons why your income is low. Maybe you are stuck in a dead end job. Maybe you have a disability that prevents you from working full-time. Maybe you’re just not motivated to succeed in your job (and go after those raises and promotions) because the field is not interesting to you.
Regardless of the reason, having a low income is going to really put a huge drag on any hope you may have of getting money.
How to Fix It
So how can you fix this?
The answer is simple, but not easy. You need to increase your income. Are in a dead end job? Expand your skills so you can get a better job that pays more. But be smart about it – target a job that will lead to a career. Not just a job that is one rung above what you currently have.
If you aren’t interested in going back to school or learning a new trade, you can increase your income by freelancing.
We are now living in a gig economy and there has never been a better time to augment your income through freelancing. You can drive for Uber or Lyft, deliver food for DoorDash or Instacart, become an errand runner for the elderly, get paid to chat with someone in English, or become a virtual assistant. None of these require additional education or prior experience.
If you want to learn more about freelancing, check out my article on the easiest freelance jobs for beginners.
You Can’t Seem to Control Your Spending
If income is one side of the equation, spending (or expenses) is the other. You can make a boatload of money from your job or business, but if your spending is out of control, you are not going to be making any headway when it comes to getting money and becoming wealthy. I know a lot of high earners (we are talking about people who make well over 6 figures) who are living paycheck to paycheck.
It’s hard to believe, I know, but if you are living in a high cost of living area, your money is going to get eaten up by housing costs, car payments, insurance, food, gas, and a million other things that you need to pay to keep things running in your life.
But let’s be real here. Yes, to some degree, you might be a prisoner to your high cost of living area. But in almost every case, you can find a way to reduce expenses. I admit it’s not easy. Spending feels good in the moment – you get a quick psychological rush when you buy something you want. But the long-term effects of overspending can be terrible for your financial life.
Of course, if your income is low, you have to be even more focused on keeping an eye on spending because you have less room for error. The truth is that no matter what you earn, watching what you spend needs to be a priority if you want to start accumulating any real money.
How to Fix It
So how do you do this?
There are two schools of thought.
The first is to create a budget and stick to it. Seems obvious right? But it is easier said than done. I can’t count the number of times I sat down at my desk and looked at my income, tallied all of my monthly expenses, and created a foolproof budget that would make everything work out at the end of the month. I absolutely committed to myself that I would not spend more than my budget allowed.
Of course, I failed time and again. Sometimes it was because I was too ambitious with my spending cuts, sometimes it was because I got busy and abandoned my budget, sometimes it was because my budget was inaccurate or didn’t account for irregular expenses, the list goes on. But I kept at it and eventually, I was able to find a budget that works for me.
If you want to learn more about the top reasons why most people can’t stick to a budget (and the lessons I learned on how to overcome them), check out my article on the 10 biggest reasons why budgets fail.
But if you can’t stand the thought of budgeting, there is another option. It’s called paying yourself first.
Using this strategy, you pay a certain amount of money to yourself before you pay a single penny toward anything else. Once you have paid yourself, then the remaining money can be used to pay for everything else. You don’t need to keep track of expenses and how much you spent in each category. Just make sure that you don’t run out of money at the end of each month!
The great thing about this strategy is that you will automatically be accumulating money each month. If you do this consistently over many years, these automatic contributions (hopefully well invested) can turn into thousands or even millions of dollars.
If you want to learn more about this strategy of paying yourself first (including how much you should set aside and tips on how to maximize your earnings from your savings), check out my article on the topic here.
Bottom line: What do I actually do to control my spending? I use a hybrid. I have a loose budget that has some guardrails around aggregate spending per major category (no counting pennies and collecting receipts for me!) combined with a strict regimen of paying my self first.
You Have Overwhelming Debt
Even if you are hyper disciplined about your spending, you will find it a real challenge to keep any money if your debt payments are too high. You may focus on trying to cut day to day expenses to make ends meet. But the real problem is sometimes the fixed costs, not the discretionary stuff.
Mortgages, credit cards, student loans, and car payments are likely the biggest debt payments that many of you will face. You will need to take a hard look at each of these and consider if there is room to cut these down to size. I know no one likes to hear this, but if you want a real shot at financial security, you have to be realistic about your debts and see if there are ways to downsize those obligations.
How to Fix It
The first thing you need to do is figure out why your fixed bills are so high. Is it because of high-interest credit card debt? Student loans? Rent? Mortgage?
Depending on the reason, you have to develop a plan to reduce those fixed costs over time. Credit cards can be a killer here. But there are methodical ways to tackle them. Check out my article here to learn some well-established strategies for eliminating credit card debt.
If student loans are the problem, consider refinancing with SoFi, a market leader in the space
Full Disclosure: You will get $10 just for checking out their offer (no hit to your credit either). I will get $10 too. If you refinance your student loan with them, you (and I) will both get an extra $300! Sounds like a win-win to me.
Finally, if you want to look at lowering your bills overall, you may want to check out LowerMyBills.com. They are a premier, free, online service for consumers to compare low rates on monthly bills and reduce the cost of living. If you are interested in learning more, just check them out here.
Unexpected Expenses Throw Your Life Into Chaos
Life is unpredictable.
Your car can break down, your heater can fail in the middle of winter, you can get sick, or your roof can leak. While you can’t predict when these types of things will happen, you know that something like that will happen to you at some point.
It’s part of life.
But not being prepared for emergencies can wreak havoc on your financial life. You don’t want a busted pipe to ruin all of the hard work you have done to put your financial life on track. Here’s how to prevent these unpredictable emergencies from doing that.
How to Fix It
The solution here is obvious. Get an emergency fund in place asap (at least $1,000). It should be a priority if you don’t already have one.
Your budget will have far more staying power if you can smoothly cover these unexpected expenses out of your emergency fund.
It can be as simple as setting aside some money into a high-yield savings account. Don’t know where to started?
CIT Bank is an option that you may want to explore. They offer one of the leading high yield savings products on the market, are FDIC-insured, and they make it easy to open an account. If interested, check them out below.
Savings accounts are a great way to begin your emergency fund, but if you are looking for some more advanced (and unconventional) options for your emergency fund, check out my article on the topic. You will learn how to get safe and secure access to your money, but with benefits that you won’t get from a traditional savings account.
You Don’t Have a Clear Picture of Your True Financial State
If you have committed to a budget, then you will already have looked carefully at your monthly income and expenses. That’s a huge first step in getting a good idea of where you stand financially.
But if you really want to start being strategic about your financial future, you will need to look past the monthly ins and outs. You need to start tracking your net worth.
What is net worth? Simply put, it is the value of what you own (assets) minus what you owe (liabilities). So if you have a house worth $200,000, cars worth $30,000 and miscellaneous items worth $20,000, your assets equal $250,000. But if you have a mortgage on that house for $100,000, car loans totaling $20,000 and credit card debt equal to $5,000, your liabilities equal $125,000.
If you subtract your liabilities ($125,000) from your assets ($250,000), then you have a net worth of $125,000.
Why does net worth matter? It gives you a complete picture of your financial condition. If you calculate and track your net worth every quarter (this is what I do), you will know how much debt you have, how your assets are performing over time, and you will be able to see if there are improvements or adjustments you can make.
It can also be extremely motivating when you start to see your net worth climbing. You net worth is undeniable proof that your hard work and sacrifice are allowing you to make real progress financially.
When I started tracking my net worth, I was dejected because my net worth was negative (mostly due to student loans and leftover credit card debt). It made me want to throw up my hands and give up. But I didn’t. Over the years, it rose (getting to a zero net worth was a big milestone for me) and my spirits rose with it.
It may not seem like a big deal, but it changes your mindset about money. It makes you reach for money goals that you may not have thought about before or even dreamed possible (e.g., becoming debt free, getting a net worth of $1 million, etc.). I highly recommend it. Every millionaire I know has a very good sense of their net worth. They may not know it to the penny, but they are absolutely focused on it.
If you would like a handy template from Microsoft for calculating net worth, check out this link.
So there you have it, 5 reasons why it’s hard to get money and some great tips on how to overcome them. Hope the article has been helpful.
If you want more great tips on how to improve your finances, check out my article on the five pillars of personal finance. It covers in detail how to tackle key personal finance issues like spending, debt, income, investing and more.