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Over the past few years I have had the opportunity to oversee a variety of different financial situations. I have seen those who make less than $600 a month and those who make more than $100K a year. By working work hundreds of different people with all different financial backgrounds, I’ve found what the big hairy truth is; you can still be broke no matter how much money you make a month. You can be raking in the dough day and night, but it does not mean anything unless you’re telling your money where to go and what to do.
A statement I hear often is, “I just need to find another side-hustle. Once I have more money coming in, I will be fine!” And sometimes boosting your monthly income does help. But sometimes all it does is increase the amount you spend because you have more money coming in. And bottom line is, as millennials we don’t have the time to be working 40+ hours a week, taking classes, enjoying our hobbies, and still managing a social life. We need to make it work with the income we have coming in already, so we don’t lose our minds by stretching ourselves too thin.
This why I want to share the top 3 most common mistakes you’re making with your money, so you can scratch “my money” off your list of things to stress about.
1 | Living beyond your means
This is listed as #1 for a reason. This is the golden ticket, the whole enchilada, the biggest mistake you could possibly make. Living beyond what your income can afford will sabotage your entire month. Yet, this continues to be the most common reason why people are always broke. So how do you find out if you’re guilty of this? I want you to reflect on your last 3 months of spending and ask yourself these 2 questions: how often did you just barely make it from paycheck to paycheck? Did you put your checking account into the negative by overspending? Were you stressed out about being able to pay the important things? If you answered yes (or even maybe) you’re probably as guilty as the rest of us for spending more than you should. The good news about this? It’s an easy fix. But only if you’re willing to make some changes. That’s the kicker. The magic fix is to simply spend less money than you make each month. You can do this numerous ways, but the biggest one is to stop spending so much money on unnecessary expenses (que next tip.)
2 | Spending too much on unnecessary expenses
Before I dive into this, I want to define what an unnecessary expense is. These are the expenses that aren’t necessary to survive. Your rent, gas in your vehicle, insurance, groceries, are all part of survival. I’m not talking about those. The expenses I am talking about are the multiple card swipes at Taco bell, your Target shopping trip that was supposed to only be a few things that turned into a $98.82 total (we’ve all been there,) and your nights out 3 times a week. These are the expenses that are not necessary for survival and they can be seriously hurting your checking account without you even realizing. The best way to find out if you’re spending too much on things you shouldn't be is to simply look at your online banking (or bank statement from the mail if you’re old school.) Do you see a trend of fast food, clothing, nights out, etc? Add up those amounts and the total might surprise you. When I first started budgeting my money each month, I was seriously shocked by how much I was spending on pizza nights and wine (my money weaknesses.) Each swipe of my card was only for $5-$10 each time, but after 4 days a week I was spending over $100+ a month. ON PIZZA AND WINE! I’m not going to tell you to stop spending money on the things you enjoy (because I would be lying if I said I didn’t still have my pizza and wine nights.) But what I am going to suggest is to cut back on those expenses. Cut your night out to only once a week and only splurge on a new outfit every once in awhile instead of every payday. It’s all about moderation!
3 | Not telling your money where to go come pay day
Ever feel like you get paid on Friday and come Monday all your money is gone and you have no idea where it went? I used to be BFF’s with that feeling too. I can’t stress the importance of telling your money where it needs to go. You can do this simply by planning ahead of time what needs to be paid and when. Before every payday, sit down with your favorite beverage (mine is that wine I was telling you about) and plan out where your paycheck needs to go. Plan it down to the last cent! That means that by the time you have your money delegated, there should be none left. Make a list of every single monthly expense that you have (along with their due dates) and lay them out on a calendar so you can see visually what needs to be paid with which pay check. This includes your grocery money, your beer money, and your taco tuesday money. Everything. This way when payday comes, you know exactly how much you can spend on nights out and exactly when your car payment is going to come out of your account. No surprises, which means you get to sit back and relax!
I know some of this information I’m throwing at you is a lot. It took me over a year to get my budget down to a science. It took a lot of trial and error, but it would have been much simpler if I had implemented these tips sooner. Take your money planning one step at a time. Don’t try to change absolutely everything overnight because if you try that, you’re going to get frustrated and become unmotivated. Start somewhere small and each pay period, add something new. For example this paycheck, focus on spending less money on your go-to food source and cooking a meal instead to save some extra money. It’s the small changes that make a big difference.
Pssst.. If you're looking for a bigger kick in the ass that goes more in-depth with your money plan, my Financial Adulting Fast Track might be what you're looking for. We dig deep into your monthly expenses and create a money roadmap together, so you don't have to try to figure it out on your own.