When you’re constantly running out of money, life is often scary. You’re stressed and unsure of whether you’re going to be able to make ends meet. Not to mention, it’s horrifying to think that you’ll likely be back in the same financial position again soon!
Running out of money isn’t just bad for your emotional and financial wellbeing, either. It also puts you in a place of desperation. You feel added pressure to pay bills and get by which can spark a mad dash to find fast cash. Not only that, but when you’re desperate, you’re more prone to making poor financial decisions, too. Ones that can put you further into debt, make you more handcuffed to a job, and put you in an even worse situation than you are now!
Most often, people who keep running out of money are also living paycheck to paycheck. Their income barely covers their monthly expenses. Not only that but it’s often used to pay bills and credit cards that are past due. This ongoing struggle prevents them from saving or getting out of the situation they continue to find themselves in!
It’s important to realize that financial insecurity and running out of money isn’t just a problem that low-income earners face, either. According to CNBC, almost one-third of workers making over $250k per year are living paycheck to paycheck. If that weren’t bad enough, one report estimates that 64% of all Americans struggle to make ends meet. As high inflation persists, this percentage will likely grow larger, too!
Despite that, it’s possible to stop running out of money. With the right financial strategies, your entire situation can get completely turned around!
Here are 5 ways you can stop running out of money each month!
#1 – Get on a Budget
If you keep running out of money, it’s like a sign that you don’t have a budget. Without one, you won’t fully understand the limitations of your income. On top of that, you’ll be less likely to spend money wisely which may prevent you from saving it at all!
However, when you budget, you know the exact amount you make. With this information, you can create a spending plan that produces a surplus. This way, you’ll have funds left over and it will prevent you from running out of money!
Most people tend to budget by the month. But, it can also be helpful to break it down by the week, too. In doing so, you’ll have a better grasp on the dates you’re paid as well as when bills are due. So if you’re on the verge of overspending and running out of money, you can cut back and be more frugal while there’s still time!
Even if you budget, yet keep running out of money, it may pay to switch your approach. Try another type of budget, like a zero-based, 50/30/20, or one that’s cash-based. You may find it works better, allowing you to be under budget and save more money!
#2: Review Your Spending Frequently
Despite people’s best intentions to stay on budget, it’s common to keep going over. While this may not seem like a big deal at first, it impacts their savings. Not only that but delays the achievement of their financial goals, too!
One of the easiest ways to determine why you keep running out of money is by reviewing your spending. In doing so, you discover all the places your income goes and the amount. With this information, you can figure out where you’re going over budget and make adjustments to ensure that it doesn’t happen again!
Also, reviewing your spending often brings about greater financial awareness. It allows you to reflect and determine which types of expenses you enjoy as well as the meaningless ones. If you reduce and eliminate the ones that don’t add value, you can stop wasting money and save it instead!
One of the best places to keep track of your spending is via Personal Capital. In a matter of minutes, you’ll gain access to your spending history. Not only that but it will be automatically updated going forward, too. As long as you open the app and review your spending on occasion, you’ll have the opportunity to stop running out of money!
#3: Clarify Your Needs and Wants
Today, in the age of plastic money and social media, it’s easier to confuse your needs and wants than ever before. Having easy access to credit cards and feeling the need to keep up with the Joneses makes it easier to justify purchases. Now, you’re more likely to buy even if you’re unsure of how you’re going to pay the bill later!
Confusing your needs and wants is another way that you can keep running out of money. To be clear, needs are budget categories that are required for your survival. They include expenses like housing, food, and utilities.
Wants are the types of expenses that improve your life. They aren’t required for you to live, yet they do add to your quality of life. A few examples include dining out, travel, and entertainment.
Although it’s different for everyone, there does come a point when a need crosses the line and becomes a want. For example, you need shelter but that doesn’t necessarily mean it needs to be a mansion. Even if you can afford it, that doesn’t imply that you should buy it. As a family of 4, you likely don’t need a 6 bedroom home. You want it for the additional space and comfort it would provide.
By understanding your needs vs wants, you can cut back on the expenses that aren’t required for you to survive. As a result, your burn rate will fall making it less likely that you’ll continue running out of money!
#4: Cut Spending
This website is called Tightwad Todd for a reason. Did you think you’d get through an entire article without talking about cutting costs? Of course not!
One of the most common reasons that people keep running out of money is that they’re spending too much of it. Regardless of whether they’re splurging too much or too often, doing either can prevent you from saving whatsoever!
While some people find that cutting costs is easy, the majority see it as a challenge. Too often, they’re cutting and eliminating their happy expenses, the ones that provide them with joy. Then a short time later, they’re left feeling deprived!
Rather than reducing your most important expenses, get rid of the meaningless ones first. This way, you won’t feel like something is missing. Instead, you’ll continue to save money which allows you to thrive!
#5: Find Ways to Increase Your Income
For some money personalities, cutting costs is a source of instant gratification. Especially since you can do it now and experience the benefits in a short time!
Even though lowering your monthly expenses can help you save, it’s important to realize that they can only go so low. To some degree, you have to spend money to survive and maintain some sort of quality of life.
If you’re running out of money time and again, it could be a sign that you’re not earning enough. Even if you have solid money skills, yet don’t earn a living wage, then you’re likely going to struggle to survive!
A few ways to increase your income include:
- Negotiating a raise
- Finding a higher-paying job or career
- Investing in yourself
- Starting a side hustle
- Learning to earn mailbox money
Unfortunately, as most people earn more money, their lifestyle creeps higher, too. Although they’re bringing in more, they also have more going out which can put them back in the situation they were trying to escape!
Truth be told, it takes financial discipline to save money. Even more so as your income increases and you’re faced with greater temptation to buy bigger and better!
However, with a plan to keep lifestyle creep in check, you can increase spending while saving, too. Once you’re saving, you’ll have the means to build a solid financial foundation that can prevent you from ever running out of money again!
Regardless of the reason why, if you keep running out of money, then the only way your financial situation will change is if you do. You have to switch up the way you’re using and potentially abusing money. And while change isn’t always easy, it’s necessary for having a brighter financial future!
Over the coming days, you may face some tough decisions over your lifestyle and spending habits. You may decide to stop eating out, watching tv, or spending so much fun money. Nevertheless, making sacrifices today helps ensure that you experience financial success in the time that’s still to come!
Starting now, build better financial habits so that you can stop running out of money. Once you do, you’ll save and that can produce the means to build the life of your dreams!
Which expenses cause you to keep running out of money? Comment below.
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