One of the most frustrating parts of trying to work a budget and get ahead in your finances is the fact that you can feel like you are getting nowhere.
Most people feel super optimistic when they make a budget plan and they agree to stick with it, but soon find themselves growing tired of it because working your way out of financial issues can take time, patience…and an entire change in lifestyle and behavior in many cases. You could be sabotaging yourself with some behaviors and not really know it. Here are 5 reasons you are still living in poverty.
1. You don’t account for every dollar
Many people make the mistake of not accounting for those little purchases we all make- a soda at the gas station here, a stop for a coffee there. These purchases that you make do indeed add up and may be cutting into money you could be saving. Think about it; even if you only spend $20 in extra purchases a week, that’s $80 a month and over $960 a year! Nearly $1,000 unaccounted for is a lot and can easily be ruining your budget, keeping you in poverty.
Tracking your spending doesn’t have to be difficult. You just need to figure out a system that works for you and stick to it. If you use credit or debit cards for your spending, hang on to each and every receipt so that you remember what was purchased and use your budget to track each one (and what kind of spending you did.) If you pay cash for each of your purchases, then make it a habit of placing your receipts in a convenient place so that you can reflect on where your money went over the course of the week.
Technology really helps when it comes to maintaining your budget and tracking your spending habits. Banks and credit card companies make it easy to log on and review your purchases. Online and word processing tools make it simple to build a budget as simplistic or detailed as you like so that you can account for each dollar that you earn (and spend.)
When working with your budget and tracking each dollar that you earn, it is essential that you put money into a savings account. Don’t aim to spend each dollar you have. Work to choose a lifestyle for you and your family that will allow you to put some money into savings from each paycheck. Only with a savings account will you be ready for the unexpected challenges that life throws your way. When your car breaks down or the lawn mower dies, you need to be in a position to do something about it. Only with a savings account will you be able to tackle costly repairs without the additional cost of finance charges.
2. You buy too much convenience
There are so many things we can spend our money on in today’s world that are all about convenience. We have become so used to instant gratification that we often forget there is another way that things can be done. Many times, that other way is not really that tough. No one really likes riding the bus, but could you take it to and from work and save yourself the gas money? How about making some of your own convenience foods rather than buying them? If you are paying twice or more for conveniences, maybe it’s time to reevaluate what you can do without.
Do you feel as though you are pretty back to basics as it is? Think about your daily habits. How do you get to work each morning? Is there another alternative that, though maybe not your ideal way to travel, would save you money over time? Rather than allowing yourself to think about the inconvenience of running on the schedule of public transportation, think about how much time you’ll get back for yourself (to read, make phone calls, etc.) if you aren’t the one behind the wheel.
Next, think about your meals. Do you eat breakfast at home, take your lunch to work and have a home cooked meal in the evening? If you’re like most people, the answer is “no.” It’s far easier, in the busy-ness of the day to grab something fast in the work cafeteria or nearby restaurant for lunch, and to pick up dinner on the way home.
Rather than choosing fast food or other convenient meal options, think about ways that you can cook so that it’s more convenient for you. Choose dinner recipes that make larger quantities so that leftovers can be taken for lunch over the course of several days, cook ahead of time and freeze entire meals for use when you have had a busy day and need a fast dinner. Another great dinner idea is a slow-cooker meal. Place the ingredients in the cooker before you leave for work, set it on low and dinner will be ready when you get home from work.
Convenience is something that everyone looks for. When life gets hectic, saving time is important. What’s also important, however, is that the ways that you save time aren’t detrimental to your finances.
3. You don’t save for things you need or want
Going with the instant gratification theme, do you find yourself buying things that you want or need without taking the time to save for them? This is an especially bad habit if you do it on credit as you will pay more for the item in the end due to interest charges. Before you buy something that is not budgeted for, ask yourself if you have to have it now or if you can realistically wait for it?
When making purchases, it’s important that you sort out your needs and wants. Among the needs would be toiletries, groceries, transportation costs and childcare expenses. There are other purchases however, that despite how much you may want them, can wait until you’ve saved the money for the purchase. As you weigh the amounts of purchases that you’re considering, really make sure that you are ready to make bigger purchases, rather than using up any money you have in savings.
As you plan larger home improvement projects or home purchases, don’t only plan for the amount that you were quoted or the estimate that you have in your mind. You must also have enough money saved that if, as soon as that project is complete or that purchase is made, another major home expense becomes immediately necessary (such as the hot water heater breaking or the washing machine stopping.) This should always be your mindset before you make a large purchase…regardless of how much you want it. Your goal should always be to have enough of a cushion that you’ll be okay if the unexpected happens.
Planning for purchases doesn’t just have to be for huge expenses…it needs to be for smaller ones too. If you find yourself wanting to update your wardrobe or purchase a new computer, first think about how necessary the purchase is and then plan ways to save the money before heading to the store. While waiting isn’t as much fun, it will save you lots of money (and stress) in the long run.
4. You pay for things late
Paying for things late such as bills and waiting too long to buy things that are on a time limit can really sabotage your chances of getting out of poverty and ahead financially. Not only does it set you up for late payment fees, but it ruins your credit and makes it even harder to get loans for things you want and need later such as a home, a better car or even a small business loan to improve your life.
Set yourself up for success with your payments. First, look into all bill payments that accept automatic payments. While auto pay requires you to be on top of your budget and know when that money has been removed from your account, it also ensures that your utility, cable and phone bills are paid on time. It is one convenience that, when managed efficiently, can save you time and money (from late fees.)
When it comes to credit card payments, each time you make a purchase, list it in your checkbook just as you would a debit or check. Note that it was a credit card purchase and create a separate line item in your budget for the money that you spent on your credit card purchases. That way when your credit card bill comes due you will have the money sitting there waiting for it to be paid in full. That’s one thing about using credit cards…you MUST pay them off completely…each and every month. Otherwise interest fees will cause you to have to pay more than the cost of your original purchase.
If you choose to use credit cards and are successful in paying off the balance each month, you will find that many companies offer incentives and money saving options. Whereas these savings programs are enticing, it is not advisable that you use credit cards as payment unless you are able to faithfully pay off your purchases.
5. You forget what you are blessed with already
When we look around and compare ourselves to others, we can easily forget what we already have and this is a set-up for disaster financially… if it compels you to buy more and more and live outside your means. Doing so just keeps you poor and doesn’t allow you the chance to get out of it.
So many people make the lifestyle choices that they do as a way to impress others, rather than to live the life that they were meant to live. As you consider your lifestyle, reflect on your priorities and personal and family goals. Where do you see your family in the next few years? If the decisions that you’re making aren’t in line with that vision, then perhaps it’s time to think about what changes should be made.
First consider your financial goals. Do you have the goal of a major home improvement project? Then maybe getting the newest phone (that everyone at work has) isn’t as important at putting that money aside to work toward your goal. Think about where you’re going financially and make sure that your habits will help you to get there.
Next, think about your family goals. Are you planning to start or add to your family? Then perhaps it’s not the best time to enroll in the costly golf club where your neighbors are members. If you are blessed with a family, then the plans that you’ve made together should outweigh any pressure you feel by those around you. Think carefully about drains that you may put on your family budget and make sure that they are helping you to achieve the goals that you’ve set.
Despite where you live or the people who you associate with, you are a unique person with unique desires and goals. In a day and age when everyone seems to want to outdo another, it’s easy to get wrapped up in feeling that you “need” something in order to belong. If ever you feel caught in that cycle, make a habit of sitting down and creating a list of all the blessings that you do have, rather than those you feel you might need at the time. Getting into a habit of appreciating those things that you do have will make it easy to say “no” to those that you may not need.
Focusing on the reasons that you may still be in poverty will help you to overcome them and plan ways to get yourself and your family into a better place. By making the changes suggested, you will be in a better position to find financial success.
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Do you know of other reasons why you are still in poverty? Please share the ways that you have found that will help others to overcome their challenges!
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