“I don’t understand it, we are on good incomes, don’t live excessive lifestyles, but have no idea where our money goes!”
Sound familiar? It is a conversation I have on a daily basis from people of all walks of life. Financial mismanagement doesn’t discriminate. It doesn’t matter how old you are, what you do for a living or how much money you make all of us can have challenges and all of us can make mistakes.
Given that this is such a common issue I thought it would be timely to share with you the three major reasons why you can find you have more month left than money.
1. You spend more than you earn
One of the biggest financial challenges people have is that they spend more than they earn. The problem with this is they are continually chasing their tails, robbing Peter to pay Paul.
Perhaps you’ve found the same, where your outgoings each month or pay period tend to be more than your incomings, which can leave you with not enough money for the basic daily living costs and ongoing financial commitments.
2. You live on credit
How do you fall into the trap of spending more than you earn? The continual, readily available flow of credit, of course!
I recently had a conversation with a young woman who had got herself into a dire situation with her credit card debt and had negotiated a deal with her bank to put in place a regular payment plan.
On the same day that she received confirmation in the mail of the payment plan, there was also a letter from her bank asking her if she would like to increase her credit card limit. Holding a letter in each hand, the penny finally dropped for her. Thankfully she ripped up the letter to increase her limit and I am delighted to report is focused on eliminating her credit card debt.
The problem with credit is that people take on levels that they can’t afford to pay off, and just keep putting out little fires every month by paying the minimum amount, which sometimes does not even cover the interest component. David Koch recently highlighted this on an A Current Affair segment on Credit Cards.
3. You want it now!
The “I want it, and I want it now!” mentality has taken hold of mankind. While the readily available source of credit is definitely enabling this, we also need to take responsibility for our own actions as well. If you can’t afford it, don’t buy it! Does anybody lay-by anything anymore? What about saving up to pay cash for something?
These points all seem to lead to the fact that we are living way beyond our means, racking up a huge credit card debt to do it (Australians currently owe $51 billion), and putting ourselves under severe financial pressure in the process.
I believe the answer to this dilemma is to stop and have a look at where you are at financially; this can be achieved through tracking your spending and inputting the data into a Budget Planner.
I have found that when my clients have gone through this process, in addition to being extremely empowered, they feel more in control of their financial situation and can begin to implement some very clear goals and aspirations around what they want to achieve for the future.
If any of these points hit a chord for you or someone you know, please get in touch with me for an obligation free chat. My contact details are 0417 614 854 or firstname.lastname@example.org.