Money is something we truly can’t live without. You need money to fund your lifestyle, school, a vacation, and just about everything else. Knowing that money makes your world (and everyone else’s) go round, how do you know when you aren’t making enough of it? After getting a job and venturing out on a life of your own, you have to allocate your money accordingly to take care of your responsibilities.
It may be hard to do that when you aren’t making enough. The CGS Team has done some research to help you identify 5 personal signs to confirm if you truly aren’t making enough money. Keep in mind, this article is for those who are truly trying to make ends meet. If you are spending half of your paycheck on a new designer bag and find yourself short on cash until the next check; that sounds like a budget problem and not a lack of income.
You Can’t Cover Your Monthly Expenses
One of the biggest signs that you don’t make enough money is if you can’t cover your monthly bills and expenses. Assuming that your expenses are all necessities (utilities, rent, insurance, etc.), if you are put in a position to pay some bills over others each month, you may need to reanalyze your financial situations.
Try to cut back on your power usage, spend frugally at the grocery store, and reduce your laundry days. If cutting back on your expenses doesn’t help, consider looking for a second job (or higher paying job). Without a doubt, your income needs to cover your necessary living expenses.
You Use Credit Cards for Living Needs
Adding on to the previous sign, if you have to use your credit cards every month to take care of left over bills, then you may not be making enough money. It may seem like the only solution, but using your credit card on a consistent basis is a terrible idea. The fact that you have to use your credit card for living expenses means that you don’t have enough cash to cover your necessities.
If you can’t pay all of your living expenses, how are you going to pay your credit card bills? Even more, what are you going to do when you reach your credit card limit? Avoid using credit cards as much as possible! If you aren’t careful, you could spend a ton of money in interest and potentially ruin your credit.
Monthly Rent is More than 50% of Your Income
…And we aren’t talking about a two bedroom apartment for your just you. If you have a studio or one bedroom apartment (in a seemingly affordable neighborhood) that eats up over half of your monthly income, you may not be making enough money. According to the 50/30/20 Budget Rule, 50% of your income should be for fixed expenses, not just rent.
Before jumping to conclusions, run an apartment search for rent prices that equal 30% or less of your monthly income. If you can’t find anything, then you are not making enough money. On the contrary, if quite a few apartments come up, consider asking for a decrease in rent based on the comparable. If worse comes to worse, don’t be afraid to move or look for additional income.
If an Emergency Came Up, You’d Be Screwed
You already can’t cover your fixed monthly expenses, your credit cards are maxed out, and now your car breaks down. With no cash and no credit, what would you do? The last thing you want is to be put in a situation where you can’t do anything until your next paycheck.
If you can’t seem to come up with money to cover an emergency, start looking for an additional source of income. Things will happen that are completely out of our control, so taking action ahead of time will help you get through the situation as easily as possible.
Saving Money Is Impossible
Whether you are short on your bills or make the bare minimum to hold you over; if you can’t seem to put any money into savings or retirement, then you may not be making enough money. Start by contributing to your company’s 401k.
It may seem impossible initially, but having 3%-5% of each paycheck automatically deducted may not make as big a difference as you think. Some savings is better than no savings, and with a potential employer match, your contributions will add up much faster.
The categories above can be sure-tell signs that you aren’t making enough income. To help you maximize the money you do have, try to cut back on as many expenses as possible. Check out the article 4 Ways to Save an Extra $100 a Month to get some ideas on where to cut back.
If that doesn’t help, increasing your monthly income is the next best option. Start selling items on eBay, get a second job, or put in some overtime. Read 8 Easy Ways to Make Extra Money for some tips. Financial problems can be the worst problems to have, so put yourself in a position to succeed!
Do you have any of the signs listed above? What are you doing to make sure you stay financially afloat? Share your thoughts and experiences with us by leaving a comment below. City Girl Savings and its members are here to help and support, so don’t be afraid to talk about money problems!