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If you ever find yourself thinking, “I have no money,” there may be a number of reasons for it. Some of these explanations may result from things that have little to do with the choices that you made.
For example, you could have had an emergency medical expense that has left you in debt. Alternatively, you may have lost a job that required you to deplete your savings in order to get by until you found a new position.
However, it is an unpleasant truth that many people are to blame for their own financial predicament because of the choices that they make. You might not even be aware of what you are doing wrong.
The short answer is that you are living above your means. You need to have a certain amount of money set aside each month to put food on the table and keep a roof over your head.
Beyond that, a failure to prioritize what is truly necessary may lead to empty pockets when you need money the most.
Even if you are not living above your means, another reason why you might have no money is that previous obligations and expenses may still be weighing you down. The cost of financing your existing debt means that you are paying money to fund your previous choices rather than being able to spend money for what you want or need today.
If you had a previous inability to budget your resources, it can stay with you for a long time and weigh you down financially for years. The good news is that this is all reversible over time, and you do not need to be stuck without money for years to come.
Here are some things to think about when you are getting a handle on your situation:
• While you may not become rich, financial situations can be made better.
• You have some element of control in your hands over your situation.
• Take a deep breath and reflect without panicking.
Two Options: Make More or Spend Less
When you are trying to figure out how you can better your financial situation, you must operate like a business would. On the revenue side of your personal ledger, you can try to increase the amount of money that is coming into your account.
Some options include taking an additional job or trying to start a business that can earn you money on the side. Both of these options will require extra time and perhaps an investment on your part. However, they are not impossible to manage.
The other option is to make changes on the expenditures side of your personal balance sheet. This means that you will reduce what you spend and make sure that it is less than what you are taking in each month.
Spending less can stretch your income further by cutting out some of the unnecessary items that help put you into the red each month.
Spending Less vs. Working More
Working more is definitely an option when you need additional money, but it is sometimes difficult to put that plan into operation. There are several things that you need to consider before getting another job, or working more hours at your current job.
Working additional hours will obviously impose an opportunity cost on you. While it means that there is more money coming into your account, it also reduces the amount of time that you have to either rest or spend with your family and friends.
Additional work comes with extra stress. This stress comes not only from the job itself but the feeling that you do not have enough hours in the day to accomplish what you want.
The increased exertion can also have an effect on both your physical and emotional health. You will have to balance your need for additional money and your personal life. An imbalance of these two things can also lead to problems. Here are some of the clear consequences to being overworked:
• You are more susceptible to physical illness.
• Your stress level will likely increase.
• You have less time for doing things that you like and enjoy.
Spending less is the best way to make what you already have go further. There is definitely some spending that you absolutely must do every month. You need a roof over your head, food on your table and health care, for instance.
However, when you cut out some of the unnecessary spending, you have essentially given yourself a pay raise on the spot. The same salary that you have will stretch further since you are spending less money. This option will require you to evaluate what goes out every month and place it into categories of what you need and what you can readily do without.
When forced to compare these two choices, most people would ultimately come out on the side of saving versus working more.
The saying that time is money almost always holds true, and people’s time has a monetary value to them. However, people do not always have the will or the proper knowledge about how to save. Luckily, this can be taught.
Why Budgeting Is Vital
The amount of time in which you can work each day is limited. Sure, one of the options is to take another position to try to increase your income, but at a certain point, you must gain control of your finances and not spend more than you take in each month.
Your capacity to live on credit is constrained the more you go into debt. While you can borrow money when necessary, you cannot borrow too much money since creditors will not lend to someone who they believe will not pay them back what they are owed.
Thus, it is critically important to learn how to inventory your spending in order to keep within the acceptable limits each month. You should view your monthly income as the cap of your spending and not rely on debt to keep you afloat each month.
Budgeting is a skill that, once you learn it, you can use for the rest of your life. The overwhelming majority of people are not in situations where they have unlimited resources. As you get older, your capacity to work may become even more limited, and it is more important to learn how to live on a limited income.
Budgeting is important not only from the standpoint that your resources are limited. At varying points in your life, you will have increases in your expenses.
This could include planned or unplanned expenses. For example, you could have an unexpected car repair bill that requires you to come up with money so you can still get around. You do not want to be one of the sizable percentage of Americans who do not have the ability to pull together several hundred dollars to meet a sudden expense.
It is critical to keep your fixed expenses under control so that you are not starting off in the hole. If you cannot manage to live on what you have coming in every month, you will not be able to stay solvent for long.
Budgeting is a skill that is vital to your long-term financial health. Your goal is to not only meet your expenses but to also slightly improve your standard of living each year, even with the unplanned expenses that you may face. Debt is what will ultimately keep you from raising your standard of living. Budgeting is what will help keep you out of debt.
Take action today to improve your personal financial situation. Over time, you can make things better.
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