Do You Have A Spending Problem
Frequently I hear people talk about their money and their money problems. One of the most common problems I hear is I can’t afford to pay my rent or make a car payment.
Sometimes the person has an earning problem; sometimes, they have a spending problem.
Either way, it makes it difficult to get a month ahead of bills and save money.
If you are struggling to make, ends meet. This post is for you. If you are thinking, Why can’t I get a month ahead of my bills? You are in the right place.
Do you have a spending problem, or do you have an earning problem?
Knowing if you have an earning problem or a spending problem will show you what you need to do. If you are trying to get a month ahead of bills. Keep reading.
Note: If you think your budget isn’t working, read my article “Does your budget work“?
A colleague told me she could barely pay her rent. This surprised me because she always wears nice clothing. On her way to work, she stops and buys lunch to-go at inexpensive places.
After we talked for a while, I learned she frequently eats out and sometimes has a weekend with the girls.
I realized she has a spending problem.
Financial success isn’t all about how much you earn. It’s about how much you save and invest.
To learn more about spending problems, read on.
Do You Have A Speeding Problem
A reasonable budget is a 50-30-20 budget. It’s easy to work with, and you don’t need to be an Accountant.
There Are Three Categories.
Needs
Needs are just that. You need these things to maintain your life and your career.
50% For Needs
- Rent/mortgage
- Groceries
- Car payment
- Insurance
- Health care
- Minimum debt payment
- Utilities
Wants
Wants are optional things you spend your money on. Things like Starbucks coffee, sporting events, and hobbies are not necessary.
30% For wants
- Dinner out
- Sporting events
- Vacations
- The coolest electronic gadgets
- Vacations
- Super high-speed internet
Savings
Savings are actually savings and investments. You use this category to accelerate debt repayment, investing, and retirement planning.
Note: debt repayment is also in the needs category, but it’s the minimum amount due. When you use money from savings, you intend to accelerate debt repayment.
20% Savings and investments
- Emergency funds
- Excerrerated debt payment (in needs, the minimum amount is allowed. Here you get out of debt faster
- Investing
- Retirement
Track Your Spending
To determine if you have a spending problem, track where you spend your money and on what.
Use a spending journal to track your spending. If you fill out the spending journal after each purchase or expenditure of money. In that case, you will not forget any money spent. In that case, you will not forget items, and your spending journal will be more accurate.
A spending journal has a column for the item (description), the amount, payment method, if it’s cash or credit debit, and the categories. (Needs, Wants, and Savings)
After a month, you’ll begin to see what your spending habits are.
If you spend a lot of money on your wants and cannot pay for your needs, you will know you have a spending problem.
The solution to spending problems is to learn to say NO to yourself.
Your needs should always come first.
And you should never neglect your savings.
Note: Do not use credit because it increases your cost of living. More debt increases your cost of living.
Putting It All Together
You have a budget. The limits are 50% for needs, 30% for wants, and 20% for savings. Using a spending journal, you can determine you have a spending problem. You are spending too much on wants, leaving you not enough money for the other categories.
The solution is to say no to yourself and not overspend from any category. You can make this budget work.
Conclusion
Do you have a spending problem? If you do, it’s easy to detect and fix. Track your spending to determine if you have a spending problem. If you do, start spending only the appropriate amounts from each category. Learn to say no to yourself.