Do you have a problem where you feel like you don’t have enough money to cover your expenses? Maybe you observe your friends and they all seem to be doing fine.
The fact is that most you meet are not good with money as they were never taught how to manage it. They either overspend, dump a lot on credit cards, or otherwise dig themselves pretty deep into debt.
Money is wasted all the time on things that aren’t essential or even really that great. You might go to your local store and buy some random thing off the shelf because you are there and you are bored.
Most people go to work and slave away their lives for money then end up with nothing much left from all that effort because people aren’t taught to be protective of their money.
There are some reasons why you end up broke and there are ways to fix them.
1. Your Family, Friends, and Socializing is Sabotage
The biggest money drain I see for most young people in their 20’s is alcohol. For some people this habit can haunt them into their 30’s. Alcohol is expensive.
I remember I used to go out with this one guy and to be nice I offered to pay for our meal and drinks. He bought a reasonable meal and then quickly downed some fancy and very expensive drinks. He ordered eight of them to be exact. The meal/drinks portion of the date cost around $120 total when factoring all the different expenses and the additions he requested as well as the tip.
To be clear, it was still a pretty fair deal given the things he purchased for me during our time together. He was horrible as a boyfriend in every other way, but he was exceptionally fair in the money department. I just remember excusing myself later to the bathroom to stare at the receipt and contemplate the fact that being around this guy was going to make my budget impossible to follow.
This was the same reason I broke up with my college friends because their plan every night was to buy a bunch of drinks and get wasted. They were completely oblivious to what their future actions would lead to. They ended up shocked when they had no money in the bank and want me to spot them $10 they would never pay back every other day at times. Yeah, no. This isn’t even considering the side effects from them getting DUI’s and dealing with the bonds, car impounds, court proceedings, etc, or all the other long-term consequences of such things. One night can completely derail your life.
I found I had a superior time at home being by myself. Then my WoW addiction started up and all in all it was pretty cheap entertainment for years. There was also little drama so my mental health was very good.
Otherwise, if I wanted to get out and do something I had the money for it so I would indulge once in a while. I also acquired new friends who valued good money handling and we managed to squeak out some really good memories that fit with our money goals. Frugal is not deprivation nor being cheap, it is being intentional and getting value.
Even now in adult life in Minneapolis it seems like most adult circles revolve around drinking. They might invite a whole group out once a week and then announce drinks at their place on the weekend. Then someone else wants to do drinks again a couple days later. Happy Hour here and Happy Hour there and boom. You lose $30 or $50 and the next thing you know there is a couple hundred gone forever out of the bank.
How to fix it: You can do what I did and do the extreme method of being more of a loner or you can schedule your socializing better or wait for a different friend circle. Instead of going out every weekend you can have “no spend weekends” every other week depending on your money goals. You can start turning down invites more often.
You can also approach people you are fond of with alternative activities like going for a hike, or frisbee golf, or some other activity that lets you socialize and enjoy the day where you don’t bleed money.
Another alternative is to invite people to your home where you host. People can each bring something over with them to share or you can supply food in a more cost effective way. You can control how expensive your gatherings end up.
It is also possible to check for free events that come up from time to time. Maybe you go downtown to check a music event or maybe drive out where some festival with free or cheap entry is going on.
2. You’re Buying Cheap Instead of Value
If you pick an option at the store based solely on price then you often end up spending more money. If you buy improperly made shoes, they will start to fall apart in a few months and force you to buy another pair. You have to do the math here to figure out if the purchase is going to work. Usually, you save no money having to buy stuff that is just going to break or requires constant repair.
A couple of years ago I had a lovely cat, a rescue situation and I got him as an adult. My lovely cat had a weird affection for wine glasses. When he saw a wine glass sitting out he would promptly jump up to rub it and spill the contents and break it. This isn’t an example of a cheap purchase so much as a problem that requires a solution to this particular problem.
The solution? I bought metal cups. If there was any alteration to the wine taste it was out of my detection. Even if the cat did manage to knock the cup off the counter or desk or something the cup didn’t break.
How to fix it: Don’t be in a rush to buy something. People put out so many reviews for things that it isn’t too hard to avoid the obvious bad purchases in most cases. You want to buy things once, then never again if possible.
This doesn’t apply so much for computers because regardless of what you do they will require changes and upgrades.
It also helps to try to learn as much basic repair as you can. This is partly why I’m very good at laptop repair in particular. I was too poor to hire some local repair shop to fix my laptop so I took it apart myself and messed around with things until it worked.
Furthermore, be wary of brand loyalty. When going into a purchase the name on it should be irrelevant, you want to be able to assess quality. Ignore the name and break away from mindless purchasing.
Now the main way I’m guilty of this is with food. You could probably apply it to lost wages from not being productive during downtime, but for me this mostly applies to food. I’ll work all day at my job then get home with this feeling of complete mental haze. I’ll feel tired, cranky, happy to be home, and insufferably lazy.
I have had nights there where I just go to the vending machine downstairs and buy random crap and call that dinner. Other times I leave out and go by a local Korean restaurant and get some delicious dinner. So delicious I don’t mind that I’m bleeding away money.
Being lazy is expensive.
How to fix it: It requires a complete overhaul of discipline. With a grand conscious effort you can change things. If you identify a way where being lazy is causing you to lose money, change your habit.
In my own case, I’ve learned Crockpot cooking. If you want quick food, you get an Instapot instead or invest in a decent air fryer. My favorite thing to do with an air fryer is to take chicken from frozen to cooked in about 30 minutes and eat it with some rice. You can do that and more with an Instapot though the chicken is less crispy like the air fryer chicken.
6. You Don’t Track Your Money
Most people check their social media of choice once or more per day. When was the last time you really took a deep look at your financial situation? Have you ignored your accounts lately?
Maybe you keep on top of your debt and bills, just you never bother to do a full inventory of your net worth. Maybe you put off checking that credit card balance and hope it goes away. You pay the minimums so it mostly stays off your back and lose tons over the years to interest.
Honestly, this is easy to do. I spent my first year living on my own mostly oblivious. I didn’t go into any debt as I abhor the general principle, but I was still scared to check my accounts. My goal to live comfortably in a house in the country to farm (which was accomplished) always seemed far away. Then I tackled the problem and I avoided a lot of things that can derail life plans.
Some of this is luck. I have seen people who do everything right still end up in a completely absurd situation because some random calamity struck. Usually, it is something related to medical though lots of things pop up. If you are here, then take a breath and start working on whatever you can.
How to fix it: Get your accounts organized in some form either in an excel document or link everything up to a Personal Capital account. Then go through every place where you have bills and pay more than minimum and start putting a dent in your debt.
7. Your House is More Than You Can Afford
People all seem to think these days that they need some big impressive house in some big-name neighborhood. Something they can tell people about and everyone can act all impressed. Maybe they show off a little and invite people over.
Time goes by and they realize the home payments are eating a lot out of their month to month checks. Then maybe their wife wants to be a stay-at-home mom. Great, now they have to switch back to one income for a while even though they are already struggling a little. They look at their finances and think, “How am I supposed to make this work?”
(Side Note- A lot of stay-at-home moms figure out how to make money while staying home, or at least the ones I know in blogger or content creator circles. The thing is if they weren’t earning from home before they want to shift to working from home it might take some unknown period of time before they figure things out or have the energy or mental clarity. Pregnancy is hard and adjusting to being a mom is hard. )
How to fix it: Buy only as much house as you need that you can comfortably pay on one income. How about we suppose you make $40,000/yr. You divide that by 12 for each month, it comes out to $3,333 before taxes. The general rule is to spend about 25% on housing expenses. 25% of $3,333 comes out to $833.25. Your mortgage payment should not be over this number. You will also have to calculate taxes and insurance costs or other hidden expenses.
It might not be a dream home, but you will sleep better knowing you can afford it. There will be room for repairs or building savings. Even if it is a particularly bad spending month there should be little stress about paying for housing.
8. Your Job Doesn’t Pay Enough
This is the big obvious one and most common complaint I hear. Especially among the “essential” workers. Everyone was running around saying stuff like how essential workers were all “heroes” for working during a pandemic. A lot of them made the argument that people should stop calling them heroes and just pay them more so they are rewarded or bumped up to a living wage.
The thing is if you have already stripped the excess spending there isn’t much you can do more other than make more income if the current income isn’t covering investing and saving goals.
How to fix it: Work as hard and smart as you can. Maybe position yourself to either ask for a raise or show your boss that you’re worth a raise. If this doesn’t seem to be happening, maybe it is time to look elsewhere and see if another place is offering more pay for your sort of work.
My mother originally was working for a university and later switched to another company where she earned an extra $20,000 a year for the same type of job. My mother works as a programmer and found the pay better when shopping around.
If your job isn’t a career-worthy thing, you need to figure out a different path for yourself or figure out school options or low-cost education options. You need to hustle and work so you can be comfortable and lazy later. Just a fair note here too, work and “hustle” culture isn’t healthy for too long. There needs to be a balance in life of work and life outside of work.
9. You Don’t Prioritize Saving
Many people live in such a way where they are barely able to afford their life and can’t even conceive the idea of stashing $25 away once in a while to an investment account or throwing a couple of bucks here and there into a high yield savings account just to hold onto. Most people don’t even have sufficient emergency funds.
It is alright to be a little lost in your 20’s. This isn’t good by the time you hit your 30’s. It is very important to get your financial life up to date in your 30’s so you can have a comfortable life with at least the hope of a retirement plan aside from other financial goals.
How to fix it: In my own life I do a balancing act where most of the time I cut down on my spending bloat and I only spend when it pleases me to do so. It helps to have an automated investing strategy at work.
With investing some would argue that it is nonsensical to start investing when you have very little money though I would argue the opposite as having only a dollar or two a week to throw at something will help build habits. Then when you have more money to throw around your habits are already developed.
I started at 17 with a little money in a savings account though rates weren’t as abysmal back then. When I got older I looked into bonds. A little older then I moved to online brokerages and the world of stocks and funds.
I didn’t know what I was doing back then so in 2005 I was invested up in Microsoft and AMD as well as some other random stuff and all things considered did pretty well despite having no idea what I was doing.
This isn’t to be considered a full list. These are just the things I could think of off the top of my head where my money goals were made healthier. Whatever your money goals are, don’t give up. Learn a little every day and keep going until you reach your goals.