I often hear people say, “I have a steady job, so why am I still broke?â€ Or, “I try not to spend a lot of money, but it doesn’t work. Why don’t I have any money left after I pay my bills?â€ Well, here are 10 answers to your question.
1. You don’t have a budget. Budgets are a way to help you keep track of how much you’re spending and what you’re spending your money on. Don’t rely on memory when it comes to what’s going into and out of your bank account. Write it down and plan for upcoming purchases. You’d be surprised to see how much the little things like daily coffee and lunches out add up.
2. You don’t save. You might not be able to save the suggested minimum of 10% of your take-home pay, but it’s wise to save something. Once you’ve decided what that number is, be consistent. Set up automatic deposits to your savings account to make the process easier.
3. You often lend money to family members. Nine times out of ten, your family member will not give you back the money you lent them. And if they do, it will probably be much later (and less) than you had anticipated. Remember: if you lend to kin, the chances of seeing your cash is thin. Learn how to say ‘no.’
4. You spend more than you earn. If you’re spending more than you earn, you’re probably dipping into your emergency savings (if you have one) or relying on credit to bridge the gap. If cash flow is an issue, you’ll have to earn more income or spend less. In other words, get a second job or cutÂ back.
5. You’re keeping up with the Joneses. Just because your co-worker got this season’s Louis Vuitton bag or the latest tech gadget doesn’t mean you have to go into debt to keep up.Â There are places like Avelle (formerly Bag, Borrow, or Steal), where you can rent handbags. And you can wait for the tech gadget to go on sale. It always does.
6. You don’t take the time to improve your financial literacy. You can gain knowledge about personal finance by reading books and magazines on the topic, watching television shows about money, taking a class, or visiting a personal finance Website. Visit the personal finance section on our site for information on everything from credit and debt management to investing.
7. You rely heavily on credit. Put the plastic down. It’s easy to mindlessly swipe your card when you’re paying for things. Using cash for daily purchases will force you to pay attention to how much you’re spending.
8. You’re not living below your means. Just because you can afford it doesn’t mean you should buy it. If you’re single and living in a four-bedroom house, there’s a problem. If an emergency comes up, you’ll be strapped for cash, and that could throw your finances off for months. Learn to live below what you can afford.
9. You’re not using all ofÂ your resources. Before you go shopping, read the store’s circulars and identify sales. Clip coupons. If a store that you frequent has a loyalty rewards card, get one. Every little bit counts when it comes to saving money.
10. You’re simply not earning enough. If you’re having trouble making ends meet, perhaps due to the birth of a child or some other life change, you’ll need to make a decision. In this instance, it’s time to look for a higher paying job.
Sheiresa Ngo is the consumer affairs editor at Black Enterprise.