I Earn More But Have Less; What’s Going On?

It is almost never had to spend money. The more you make, the easier it may get to spend money with the result that you have less money now than you did when you made less money each month.

Here are some tips to help you build a plan for your family to save more money each month.

1.  Set financial goals. Together with your spouse, set some specific financial goals that will motivate the behavior you want.

2.  Prioritize your spending. Spend your money in order of priority. Saving should be right on or near the top of your spending priorities. Entertainment should be right on the bottom. Spend only what is left over on those items you really don’t need.

3.  Keep your savings out of reach. By assisting in a 401k, you make your money harder to reach—it is practically difficult to turn it and if you do, it is subject to penalties until you are retirement age. Us and 529 College Savings Plans have similar features that make it easier to put money in and hard to get it out.

4.  Limit credit card uses. Don’t use your credit cards to make purchases you can’t afford. Use credit cards as a convenient and easy way to track your spending. Stop using the cards when you stop having money in the bank to meet the purchases.

5.  Prepare a budget. You don’t have to call it a budget, but you need one of those things that will keep you from spending too much money every month. Write down how much you’ll spend for each discretionary category, like dining out, groceries, entertainment, clothing, etc. Note that some of these categories are not optional—you can’t skip eating and the law requires you to have clothes—but you have huge influence over how much you spend—even on groceries.

6.  Follow the budget. The budget is just as valuable as your self-discipline in following it. Hold yourself to account. Remember, the goal isn’t to make you miserable because you can’t splurge on a smoothie while you’re at the mall, it is to empower you to be able to do the big things you want in life, like have a nice home with a mortgage you can afford and car that isn’t always in the shop. Let us remind yourself of your goals.

7.  Keep a rainy day fund. You should seek one day to have a year’s worth of spending in a rainy day savings account. That will be hard to do. If you can get $500 and then a few thousand dollars in the account, however, you’ll find that these funds are a significant contribution to prevent small disasters from becoming major ones.

By following these simple guidelines, you can empower your family’s finances with goals and vision that will translate into everyday decisions. Money will never buy happiness, but managing your money well can provide the peace of mind that will allow you to focus your family on what matters most.