Are you living paycheck to paycheck? Do you wonder how you’ll afford your rent or groceries? If you’ve worried about how to pay an everyday expense, you may I know that money can be a touchy subject, but I’m here to tell you that ignoring it won’t make the problem go away. Being without money is a scary feeling, and if you experience the unexpected expense that requires you to take out a loan, you are not alone. However, I am here to tell you that by being more conscious of your budget and spending, you can prepare for those terrible moments and remain comfortable with your everyday expenses.
I have a passion for budgeting and I want to share it with my fellow equestrians. We enjoy a very expensive sport, and our horse always finds a way to bring up an unplanned expense right when we feel comfortable with our finances. Read on to see if you are guilty of spending too much or not preparing for expenses of life.
I just read a shocking statistic – a study by CareerBuilder in 2017 said that 78% of full time employees live paycheck to paycheck. Wow! I know that living paycheck to paycheck is an unfortunate part of many Americans’ lives. But I did not know it was that high of a percentage. That means about 8 out of 10 people who are employed with full time jobs live paycheck to paycheck!
Let’s talk about the warning signs that indicate you are living beyond your financial means.
Are you a part of the statistic of people who live paycheck to paycheck? If you don’t have any money left after paying your bills, you may need to re-evaluate your spending versus your income. Check out my posts about developing a budget if you need a little help with examining your budget. If your income isn’t high enough to support your everyday expenses, consider trying a side hustle. Or find a new job or negotiate a higher salary.
You don’t have any money for savings. You should be saving about 10-15% of your income. That can include retirement savings, contributing to a savings account or contributing to an investment account. If your employer offers a 401K and you are not participating – you really need to!! Contributing to an employer plan especially with matching is a no brainer – it’s like free money!
You take out loans to buy more things or buy experiences. If you are living paycheck to paycheck and take out a loan to go on a vacation every year, you should not be going on vacation! If you go shopping for a new tv or new furniture with the mentality that it can be purchased with a loan and a monthly payment that you can “afford”, then you can’t actually afford the item. I’m not saying there isn’t a place for loans. They definitely need to be low interest, but high interest rates on loans or credit cards can kill your bottom line!
If you aren’t paying credit cards in full every month – throw them out! Credit cards can come with awesome rewards. I have many that get me free hotel stays, airline miles, cash back, etc. BUT I pay them off in full every month. If you cannot pay for something in full, you simply cannot afford it!
An unexpected event happens and you don’t have an emergency fund to cover it. Your horse needs surgery, your car breaks down, you have an unexpected medical expense. Life happens, and you should have an emergency fund or money in savings to cover unexpected events. I always like to plan for the unexpected. You don’t know when it will happen, but inevitably you will run into problems in life that cost money. Stick to a budget to be prepared for the curveballs life throws at you.
You can’t afford the normal every day expenses. I keep seeing an ad for an app called Earnin (I do not recommend it). It is an app that lets you borrow money until your payday. The ad asks how a young man can afford groceries if he hasn’t gotten his paycheck yet. If you cannot afford groceries, gas, rent, mortgage, etc, then you need to examine your income and expenses and make some changes. Your basic needs should be easily met. Don’t over-spend on rent or mortgage – your housing expenses should not exceed more than 30% of your income.
You buy things because you think you should. Our shopping and buying habits are influenced by our peers as well as advertising. Don’t let yourself fall into the trap of buying something just because other people have the newest iPhone, clothes, boots, saddle, car, etc – doesn’t mean that you need to buy it! Resist the urge to buy something because you think it will make you look better. Your bank account does not appreciate the depletion, and does it actually make you happy? Try giving yourself several days before you buy something you think you “need”. After those couple days if you have the funds and you actually do need it, go ahead and buy it. Usually you’ll discover that you didn’t actually need it at all.
If you are guilty of any of these things, I suggest you start using a budget and get your finances in order! I have a couple posts about creating a budget and sticking to it. I also think it is extremely valuable to create multiple avenues of income – such as side hustles, an additional evening job or even working overtime at your current job. Increasing your income can balance your budget in your favor. See these related posts:
We are not all the same, so one method of budgeting and saving may not work for everyone. But you do need to have some discipline and decide what is important to you. You can save money, live happily AND save for your future – it just takes a little work.
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