5 Reasons You Have No Money and the #1 Solution
Sometimes we get stuck in a rut, unable to see or understand what is happening around us, especially when it comes to our financial responsibilities. The longer you stay in this situation, the more chances you have of making poor financial decisions. In order to make a positive change, you need to know how you got stuck in the first place. How did you end up in this predicament?
The Top 5 Reasons you have no Money
1. You are just going through the motions.
If you do not have a budget and have not set financial goals, you have no idea what the future will hold for you. If you are old enough to earn a paycheck, you are at the perfect age to start investing. It may seem absurd, thinking about retirement in your late teens or early twenties. But, the more time you have the more you allow compounding to work in your favor.
According to Brian Tracy in his book No Excuses, “When you are not working deliberately, consciously, and continuously to do, be, and have those things that constitute success for you, your default mechanism is at work. You end up doing those fun, easy, and low-value things in the short term that lead to frustration, financial worries, and failure in the long term.”
Take the time to write out your financial goals, go over your budget, and understand how much you need for retirement.
My first real job was being a hostess at a Japanese restaurant. I was seventeen, and I received minimum wage. After taxes my weekly paychecks were just under $100. I was fortunate because I had absolutely no expenses at this point in my life. I still lived with my parents and went to high school.
In my entire life, this is the smallest amount of money I've ever earned for a job. But it also represents the most I've ever saved from my paychecks. I saved 100% of the money I earned from every paycheck from this job. This taught me a lot about self-discipline, self-control, and delayed gratification. And it took deliberate, conscious, and continuous work.
But it was totally worth it, I created good financial habits because of my efforts. And I was able to really focus on my goals during college. I started college without any student loans and I ended college with no debt. My hard work really snowballed into favorable wins in this way.
2. You confuse your WANTS with NEEDS.
On the surface, a want vs a need is very simple. A need is a necessity, something you need for survival. A want is something you’d like to have. But looking a little bit deeper, most wants can be stretched and justified as needs. I need that ice cream, it falls under the category for food, and food is necessary for survival.
Looking at the most basic of needs, we only need shelter, food and water, basic health care and hygiene products, and basic clothing to cover our needs. Everything that goes beyond these for simple necessities is technically – a want. Too many clothes, dessert, designer accessories, new cars, new electronics, are all wants.
Should you deprive yourself? No, absolutely not. The occasional ice cream isn’t going to bankrupt you. But there needs to be balance, it is much easier to break your budget than trying to climb out of a debt hole. If you want to treat yourself, by all means, just make sure you can afford it first. Life is meant to be lived, enjoy your extras when you can.
3. You don’t have an emergency fund.
We all know that life happens. And when it happens, it happens hard. Going through tough times is rough enough. Adding the stress of growing financial burdens is just adding salt to the wound. An emergency fund, with enough money, is essential to having money.
If you lose your job how long will it take to find a new one? What if your car has a costly repair? What will you use while your car is unavailable? If you own a home and face large, costly expenses such as needing a new roof, will your budget be okay? What would happen if you were in an accident and injured?
An emergency fund can give you peace of mind as well as a cushion to help you out during difficult times. Basically for when you face emergencies. If you are living paycheck to paycheck, this is a good way to force your brain to think of ways to come up with extra money to save. Can you think of anyway to save just $30 extra dollars a month? That's just $1 a day or less!
Add what you can to your emergency fund and you'll find that as you continue this habit, more money will find it's way to you. For more information about setting up an emergency fund check out this post.
4. You feel you deserve this lifestyle.
“Keeping up with the Joneses” is the best way to ensure you won’t have any money or happiness. Comparing yourself to a friend or neighbor isn’t going to make you feel very good. Purchasing things simply for the sake of demonstrating socio-economic or cultural superiority will never help you to better yourself.
If you enjoy going to happy hour every evening after work, what is it costing you? Think about the long term effects of this type of behavior. If you are consuming three alcoholic beverages each evening, and each costs you $4.00, you will end up spending $263,000 over the course of 60 years according to Business Insider. This could be costing you retirement.
5. You don’t earn enough money.
If your expenses are higher than your income, unfortunately that isn’t your job’s fault. And it is not a reason to go into debt. Your two options are to make more money or make some cutbacks. Technically, three options since doing both will work as well.
Check out my previous post on Unhealthy Habits that are Killing you and your Budget, for some ideas on how to save money by quitting bad habits.
Fix these Problems with Good old fashioned self-discipline.
If you have the self-discipline to sit down, budget at the beginning of each month, go over your finished budget at the end of the month, write down your financial goals, be aware of your financial needs for retirement, and work deliberately towards your goals everyday...
You will not have a problem with #1. Just going through the motions.
If you have the self-discipline to focus on your long-term goals, you will not go overboard with your WANTS. Instead you will feel gratitude for the items you do possess. And as you set up a reward system for your hard work, you will be able to fully enjoy the reward you actually earned.
You will not have a problem with #2.Confusing your wants with needs.
If you have the self-discipline to put aside money until you have accumulated about 6-months worth of expenses, not touching it until an actual emergency does occur, and replenishing as soon as it is used...
You will not have a problem with #3. You don’t have an emergency fund.
If you have the self-discipline to invest in yourself instead of material possessions for the wrong reasons, you will grow as a person and accomplish more than ever before. You will feel happier, more confident, and more fulfilled.
You will not have a problem with #4. You feel you deserve this lifestyle.
Finally, if you have the self-discipline to work hard and efficiently, produce results and continue to learn. Doing whatever it takes, whether that means getting another job, taking on more responsibilities at your current job, or finding creative ways to saving more money...