He has a job, maybe even a good one, but he lives from paycheck to paycheck and has nothing saved. How did that happen?
You don’t set goals
You won’t get anywhere unless you set goals. This applies to your career, your life, and certainly your money.
Set a goal of saving x in 12 months, and saving in 5 years and z in 10 years. Sure, life throws us a curve ball every now and then, but you need to know what you should have saved at each stage of your life, even if you have to catch up every now and then.
If you are 25 years old, you should aim to be worth $ 1 million times 50, including your house. If you are 40 years old and still have nothing, try to start by saving $ 500 a month (increasing by $ 100 a month each year) to have a value of $ 1 million by age 65.
You don’t have a budget, or you have a budget, but you don’t stick to it.
Budgets may seem boring, but trust me, it is much more boring not having money. Set a budget and stick to it. Your savings come first, then manage the rest, whatever it takes.
You waste money
Any money you waste is gone forever. Eliminate cigarettes, dinners, drinks at the bar, brands … It is much more important to be on the right track financially. Invite your friends to dinner instead of going to the last expensive restaurant, open a cheap bottle of wine at home instead of drinking at wine bars, learn to cook instead of ordering takeout, buy cheaper things, have a 6 months freeze expenses, renegotiate your mortgage, talk to your bank to eliminate or reduce fees, find free things to do on weekends instead of spending hundreds of dollars.
You don’t earn enough or don’t work enough
Even if you have kept your expenses to a minimum, you may simply not earn enough. Double your work and try to get a promotion or two. Look for something that pays better instead. Sometimes you have to move to get ahead. Make that CV look professional. Start a side gig to earn some extra money. If you are only working the bare minimum on your day job and then partying after 5pm, you will never be financially secure.
You are in debt
If you are in debt to the bank or simply paying the minimum on your credit cards, you are working for them, not yourself. The only debt you should have is your mortgage. Make a plan to pay off everything else, starting with the most expensive debt in terms of interest rate, and set some target dates. Try adding all of your short-term debt to your mortgage and figure it out for yourself that it will never happen again.
You are in the wrong group
Your friends spend money like there’s no tomorrow and you try to keep up. Maybe they are earning more than you, or maybe they also have debts that are dragging them down like you. Don’t be afraid to say no to the latest money-spending idea. Find new friends by joining cheaper activities like book clubs, hiking groups, cooking classes, etc. You will soon join a better crowd.
You live with the wrong person
Your partner spends a lot and you are too afraid to put your foot down after so many years. But why let a spender make the monetary decisions? Has no sense! Take the control. Close the joint account and cancel those joint credit cards. Okay, you didn’t fall in love with someone because of their spending habits, but come on! Are you going to work like a donkey the rest of your life for nothing? Divorce is expensive, but many people say it saves them money in the long run, so don’t be afraid to make some responsible decisions and draw some red lines.