We’ve all had that feeling; you work hard, earn money, pay your bills and end up with nothing left at the end of the month. That feeling can be temporary for some, but for many of us, it can seem like a never-ending treadmill. Every month is the same – we feel like we just never have enough money.
Why is that though? If you earn a relatively good wage and you don’t feel like you spend money frivolously, surely you should be able to manage to the next payday, or have something left in the bank each month.
The problem with money is that most of us don’t pay nearly enough attention to it. Without keeping an eye on everything, your finances can get out of control and you’ll probably be spending more than you earn.
Here’s why it seems like you never have enough money:
1. You don’t budget
This is the top reason why people feel like no matter how hard they work they just don’t have enough cash. Without budgeting, you really have no idea what you’re spending your money on and how much you’re spending.
Each month, you’re on a wing and a prayer; a cursory glance at your balance before making a purchase is all you go on, ignoring the fact that next week, you might have bills coming off your account. Such short-termism is the leading cause of financial difficulty, so it’s time to budget.
Budgeting means tracking every single payment coming in and going out of your bank. It means setting yourself upper limits on expenditure, but also drilling down on those expenses. Categorise your spending, using a spreadsheet or budgeting app, and track your spending for a month or two. This will show you where you overspend.
Then set limits on certain categories and make a concerted effort to reduce others. For example, if you track your expenses for a month and realise that you’re spending £50 a week on lunches, it’s time to think about making up lunches at home instead of nipping out for a pre-packed sandwich and coffee every day.
2. Frivolous spending
Once you start budgeting, you’re almost certainly going to be horrified at the amount of frivolous spending you do. What might not seem like a lot with each individual purpose soon adds up over the month.
If you work in a city centre and you occasionally find yourself drawn to clothing or shoe shops on your lunch break and once or twice a month you splash out on something new, you’re probably impulse buying.
Instead, you should be sitting down to look at your budget before making any purchases. You might feel like you’re not spending a lot, but once you add it all up, you realise that you’re overspending.
If you’re being honest with yourself, you probably know you can’t afford these expenses, but because they are impulse purchases, your reward areas of your brain are over-riding your logic. Don’t put yourself in temptation’s way and instead commit to only spending what you can afford.
3. You’re not saving anything
If you’re not saving money, you can never have money. If all of your spending is short-term and you never get to the end of the month with money in an account somewhere, there’s no getting away from it; you will never have money.
You can’t expect to accumulate cash when all you do is spend as fast as you earn. You have to start looking at the bigger picture and start thinking about what that money could do for you in the future.
Get your short-term spending under control, cap your expenditure using budgeting and whatever you have left, put it in some kind of savings account. This will be difficult at first; it’s highly likely that you’ll put money in savings only to take it out again every month. But stick with it.
With persistence and sticking rigidly to a budget, you’ll find that there comes a time when you realise you’re adding to your savings and that it’s starting to grow. Then you’re on your way to having money instead of spending money. Try to always save before you spend and consider each purchase before you buy. This isn’t to say you don’t live a life, but just keep track of what you spend to make life a little easier.