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6 In Personal Finance

Do You Have a Spending Problem or an Income Problem? Video Post

Making ends meet, can be a battle. Your monthly paycheck can only stretch so far to cover your expenses. Those who earn higher salaries can also find themselves in the same boat each month, left wondering where all their money has gone? At times we think, if only we had more money than things would be easier, but more money isn’t always the answer. I’m going’ to help you determine if you have a Spending Problem or an Income Problem and provide you with some tips to help solve it.

You may fail to realize that earning more often equates to spending more. So, what is the real issue? Do you need to get your spending under control through budgeting to reduce expenditures or do you find yourself cutting back more and more, and still not having enough money to support yourself?

What Kind of Problem do You Have?

Take a good look at yourself and reflect on what is happening with your money. Think about these points:

  • Are you earning more money than you were 5 years ago? (by how much, 5%, 10%,  20% or more)
  • When you get a raise or bonus, do you go out and spend it right away? Would you call shopping a hobby?
  • Do you lease a new car every couple of years? Or buy the latest electronics as soon as they come out?
  • Do you take vacations often, whether you have saved for them or not?
  • Do you go out to eat, or meet your friends at happy hour 3 times a week or more?
  • Are you not tracking your expenses or sticking to a monthly budget?

If you find yourself answering yes to these questions, then you probably have a spending and not an income problem. The truth is, when you make more money, it doesn’t mean you need to spend more money. If you want to acquire wealth think of your bank account like taking a bath, turning on the faucet will not fill it up unless you stop up the drain.

How to fix a Spending Problem

Fixing your spending problem can be very simple once you identify the cause of the problem. Understanding where you are spending your money will help determine how to cut your expenses. Categorize your spending to identify the problem areas. To track my expenditures, I use Mint.com, a free comprehensive money managing tool which can help you budget, set up a savings plan and track your investments. I highly recommend it!

Be Better at Managing Your Money

After speaking to many friends on the subject, I realize that the problem may not be having the right tools, but using them. It doesn’t matter what method or financial app you use to sift through your finances, the key is setting a schedule and doing it! I set a reminder on my phone to go through the past week’s transactions every Tuesday at 1:31 pm (I know it is an odd time, but it works for me). Find a time that works for you and stick to it.

Reduce Your Bills

Once you have a clear picture of where your money is going, it is time to start cutting back. In my recent post, Why You Are Still Broke, I can help you identify your spending problems, and 20 Ways to Save Money will be your guide to reducing your monthly outgoings.

If you are diligent about budgeting, consciously “cutting” coupons and have found ways to scale back as much as you can and still enjoy your life, then it likely that you have an income problem. Don’t live paycheck to paycheck looking for ways to save without taking a serious look at how to put yourself in a better financial position.

How to Fix an Income Problem

Determining that you have an income problem is not the end of the world! There is a clear-cut solution, just make more money, right? I know the answer is not as simple as it seems. A close relative of mine has been working the past 5 years trying to do just that. With her current position as a teacher, she has gone thru salary reductions, higher healthcare premiums and increased work hours. Her efforts to combat this problem by working summer school, getting a part time job and doing some consulting work has left her stressed and burnt out, without much to show for it.

Ask For a Raise

So what do you do? First of all, it may be time to ask for a raise. Raises are issued at the end of the year, but if you have been working hard and have concrete results to show for your efforts, then make a plan to ask for one sooner than later. Prepare the justification for your case, gather all the relevant materials, and present them along with salary comps of your position (www.glassdoor.com is a good resource).

Get a Side Hustle

If a raise is not an option, then there are other ways to generate income. Market your skills or professional services and become a freelancer on Fiverr.com for some extra money. You could also try TaskRabbit.com, which allows you to place bids on jobs offered, from making travel reservations to running errands. Side jobs can be an excellent way to utilize your spare time to earn extra money at your leisure.

Find a New Job

But if you are busy like me and you don’t have much spare time to earn extra cash, then considering a career change might be the best option. According to Forbes.com, switching companies can lead to an average of 10%-20% increase in salary vs. the normal 2.1% annual increase received by staying at your current firm.

Star Your Own Business

Lastly, choosing to step away from your current job and taking a leap of faith to venture out on your own could be an option. Stick with your current skill set and start your company or go an entirely different direction by following your dream and fulfilling your passion. Trust me, it does not happen overnight but if you choose to tap into your entrepreneurial inner self, check my post on Turning Your Hobby Into a Career, which will help you set the foundation for your future.

The bottom line is, whether you have a spending problem or an income problem, you need to start implementing some serious changes into the way you handle your incomings and outgoings. Taking care of the problem now will only help you achieve greater financial success in the future.

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Do You Have a Spending Problem or an Income Problem

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6 Comments

  • Reply
    Kimberly // Manifest Yourself
    April 23, 2015 at 12:21 pm

    I needed this post today – especially since I just got the info for my new student loan payment! womp womp

    • Reply
      Sherita J. Rankins
      April 23, 2015 at 4:59 pm

      Sorry for that… But investing in yourself can is definitely worth it!

  • Reply
    Maria
    April 23, 2015 at 7:04 pm

    Thanks for the great advice. I’m always looking for ways to make extra money and have never heard of Fiverr. I’ll definitely check it out.

    • Reply
      Sherita Rankins
      April 29, 2015 at 6:29 pm

      Glad I could help, I always love share any advice that I think would benefit my readers!

  • Reply
    Linda Barber Bray
    July 30, 2015 at 10:34 pm

    So much of your advice I knew, but it’s funny that until you hear someone else say it, it isn’t “real.” Thanks for the reminders and the new tips.

    • Reply
      Sherita J. Rankins
      July 30, 2015 at 10:39 pm

      @lindabarberbray:disqus I feel like a lot of us know what we are doing with our money, but need it see it on paper in order to really realize it. Glad I could help!

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