If you are expecting to get a customized solution for your financial problems – then skip this article…. This article is for all of you who would like to get an answer to the question: Why my monthly expenses are higher than my monthly incomes, and I don’t get richer despite the fact I work more and more every day?
The answer is because you spend more than you could afford. Most of us have no financial culture and when it comes to finance we only care how much we are getting at the end of the month as a salary and even if we get 50 % more on top of what we are currently getting we will be facing the same issues at the end of the month, as now…Sad, very sad. This is where the main problem is. We don’t really know how to spend what we make and how to make more money and finally to get richer. And even worst – what to do with them if we have positive balance at the end of the month…
Please pay attention to your finance much more than you pay attention to your best friend’s latest posts on Facebook. If you are already in financial situation when your current balance is negative at the end of the month – then you need to ‘wake up’ and do your homework. Nobody will do it instead of you. So put your sleeves up, take notes and prepare yourself for actions – NOW!
My monthly income – is it optimized? Could I earn more? Finding a second job (temporarily) while my financial situation gets on the green. If you work full time job you are busy 40 to 50 hours (with travelling) per week. You are having two days – OFF. Do you really “deserve” them? And shouldn’t you be more critical to you how you spend your own time and try your best to get out of the current situation? If there are other family members who depend on you – your responsibility is even greater.
“Don’t drop their future down, because you neglect your current status!”
My monthly expenses – are they optimized? Are there such expenses which I can cut and not to suffer. “Bad habits” – smoking, drinking, going out with friends, etc. If you have no money – you should stop them. NOW!
Do you really know how much your monthly expense is? As a number? Maybe not… This is where the problem is. You know how much you make (as a salary) but have no projections on your expenses. It’s the same if you have a Business Plan for one company, but only to calculate the revenue/turnover and not the costs/expenses. Do you think you will be profitable at the end? I don’t think so. The statistic shows the same. Project and forecast expenses! Do a ‘silly’ exercise by calculating your expenses in two months in a row on a daily base and you should be able to do the forecast for the months ahead. Of course there are expenses that are yearly and seasonally – still, you should be able to forecast them as well and have the full picture of your financial status.
Balance. This is the most important number. When you know how much you make and how much you spend – you should know what your balance is. If it is green you should be ok, but if it is red – take immediate actions and either cut costs, or try to find additional source of income or better paid job.
“Financial freedom is possible only if you forecast your expenses in details. The more you know about them – the sooner you will get to this point.”