Two minus four equals trouble when talking about your budget. If you spend more money than you earn, you will have money problems.
The problem is that you usually don’t realize what you’ve done until it’s too late. It’s hard enough to keep track of checking account spending, but by adding credit cards, spending can spiral out of control. How many times have you used your credit cards to buy clothes, impulse items, or even groceries and said you’d pay it back? But at the end of the month, you don’t have what to pay for it with.
It’s easy to say you’ll pay it off next month, or when you get that bonus at work, or when you get your tax returns. Before you know it, it adds up to a mountain of debt.
While credit cards aren’t the only way to spend more than you earn, they are a number one enabler. Other ways to spend more than you earn are to get cash advance loans or have an interest only mortgage. In the long run, they rarely work to your benefit.
It is not easy to stop spending more than you earn. But it is possible. Start by creating a budget. List all your bills and all your expenses and see what you have left over. Do this every paycheck. You have to know exactly how much money you have if you want to avoid spending too much. If you must, sit down and look at your bank account register for three minutes every morning. Write down what you have spent the day before.
Personally, my husband and I find that the more time we spend between looking at the checking account ledger, the more we spend. When we know each day how much we have left, we are able to spend more frugally. But if we both assume we still have x amount left, we’re in trouble.
If you’re a shopaholic, there are ways to reduce your need to spend. The number one way is to never set foot in the store. If you know you’ll be buying a lot of other things at Walmart, don’t go grocery shopping. If you want to go into Hobby Lobby just to look, but know that every time you look, you spend $200, don’t go in.
Another way to reduce that need is to go for what you already have. When you see how much stuff you already have, the need for more is reduced.
You know, everyone has slips. If you’ve lived in a spending habit of $5,000 a month on an income of $3,000 for a while, you may be used to juggling. And even when it starts to fall, you want to spend that $5,000. You may go out and spend too much from time to time; you just have to deal with yourself when you do. Then get back on track.
There are people out there who live comfortably on $500 a month. There are others who earn $5,000 a month who cannot make ends meet. It doesn’t matter how much money you make, it’s how you use that money. By keeping track of your income and purchases each month, you can make it on almost anything.
