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Money. One of the biggest causes of stress and worry is feeling like we don’t have enough of it. This guest post from frugal blogger Emma (of Tuppenny’s FIRE Place) shows us the 5 main reasons we feel poor, and what to do about it.
Feeling poor and not having enough money isn’t fun. It’s a stressful and negative experience and you are constantly worrying about money. I felt extremely poor when I was on welfare benefits as a teenage mum. One good thing I did manage was to not get into debt during those months.
So how come I still felt poor when I went back to work and was bringing home more money? And later when I got a pay rise? And even when I got promoted?
Looking back it’s pretty obvious. And unfortunately the answer will be the same for you if you are continually broke. It’s because we spend all our money and don’t make the right decisions about our finances.
When you look around you I bet you see people with new cars, nice clothes, having regular meals out. And you want the same because, hey you deserve it right?
You do deserve to enjoy life, to have nice things but not if you can’t afford it. The key is to change your money situation so you can afford things and enjoy life.
There are 5 main reasons you feel poor but the great news is you don’t have to stay that way. You can choose to change things, to get rid of debt and start saving. Let’s look at how you can do this
5 Reasons You’re Poor And How You Can Go From Spender To Saver
Debt Is Not Your Priority
There is good debt and bad debt. Good debt is things like student loans and mortgages, which come with lower interest rates and set repayments.
Bad debt is things like overdrafts, car loans, credit card debt and gambling. Those debts are baaad and can be hard to manage emotionally. Debt stories show you how easy it is to build up a lot of bad debt quickly.
They come with high interest rates and often have very small minimum repayments which mean you are paying them back for years. And incurring interest the whole time, not good.
If you have debt and don’t prioritise getting it paid off as fast as possible, you are costing yourself dearly. £400 a month in debt repayments for years is £400 you could be saving. You could have a nicer house, or more free time if you didn’t have to try and earn that extra £400 just to pay to someone else.
Debt repayments can’t wait. You are always at risk of a financial crisis whilst you’ve got bad debts. What happens if you lose your job, or have an accident and are off work for months?
ACTION – Make your debt repayments a priority and pay more than the minimum to clear them faster. Cut your budget in other areas to free up more money to put toward your debts.
You Don’t Budget
Budgets are for everyone, not just for those who have a decent income already. In fact for me, I’d say it is even more important when you are on a low income to have a budget. Every penny counts when you don’t earn much.
Your budget is your spending plan. And it is also your saving plan. If you don’t have a budget, you won’t have any savings because I can guarantee you will spend everything you earn.
ACTION – create your budget by following the steps in this post: How To Create A Budget And Stick To It
For more budgeting tips these posts will help:
You Don’t Earn Very Much (Or Enough)
I’m a great believer in being frugal and living below your means. But when housing costs so much, rent or mortgage, there can come a point when you really are not earning enough. And I know that can be a hard place to be.
The thing is you can change this if you put in the effort. You need to be thinking long term.
If you are stuck in a minimum wage job then perhaps you need to re-educate yourself. Or maybe you need to invest your spare time in taking courses that help you improve your self confidence first. (Always find the free resources as there is so much available for free).
ACTION Start by asking for a raise, but be clever about it. What do you offer your employer that is over and above what your colleagues provide? Take on more responsibility and prove to your employer you are worth more. Seek out promotions within your existing company.
Start applying for jobs elsewhere. Get your CV up-to-date and ensure it really sells the positives you have to offer another employer.
Take on a 2nd job, start a business, do online surveys. There are a million and one things you can do to improve your earning prospects.
All of them require you to take proactive, positive action.
These posts may help:
You Don’t Track Your Money
There are 100 pennies in a pound. If you don’t track the odd 50p here and there, the odd £5 here and there then you don’t really know how much you spend and will think you have more than you do.
If you fall into the trap of saying “it’s only £5” then that is a problem straight away. My problem was always chocolate, I used to buy a bar every day, but even that adds up over the weeks and months.
Currently a chocolate bar from my corner shop costs 75p x 7 days = £5.25 a week x 52 weeks = £273 a year on chocolate bars.
Now would you remember if you spent £273 in one go? Of course you would! Now you can see why you need to remember that you spent 75p on one chocolate bar. Because it doesn’t start and end with just that single item does it?
ACTION – Tracking your money doesn’t need to be hard, nor does it even need an app, although you could use one if that’s your thing. All you need is a pen and paper, or excel. Note down everything you spend every day, whether you get a receipt for it or not. I have found it helps to use excel so it tots everything up for you and to update your record very regularly.
If you leave it for 2 weeks you won’t remember what you spend your cash on, never mind the things you did contactless. Use your bank statements to fill in the gaps. Use cash as little as possible.
You Think You Should Spend Hundreds At Christmas
Here’s the thing. Rich people don’t spend a ton on their kids. I have rich relations and I have spent Christmas Day with them. Their kids get one or two items, and I’m not talking brand new Iphones either. Of course they could afford to spend more but they don’t.
Spending hundreds of pounds on presents for your kids, your partner and everyone in your extended family is exactly why you feel poor.
ACTION Do what rich people do and spend less at Christmas. If you have kids try following the 4 present method:
- Something they want
- something they need
- something to wear and
- something to read
For adults in your family why not:
- Have a family Secret Santa so you only buy one present, instead of one for everyone
- Limit the cost to £5 and make it a fun, joke present
- Tell family you are only buying for kids this year and you don’t want presents either – you can cite being eco friendly, being on a budget, any reason you want.
You may also like: How to Save Money on Christmas Shopping
Stop Feeling Poor And Start Saving Money
Don’t waste the next 10 years thinking the reason you are broke is because you don’t have enough money. You are in control, you can change from being broke to saving money if you take action.
It’s not easy but it will get easier, I promise. Start with these 5 areas and make the changes you need to make. This time next year you won’t feel so poor and you will know that you are the reason for this change.
How powerful is that?!
I’m Emma/Tuppenny, and I am just a little bit obsessed about frugal living! As the Chief Finance Officer in our family I’ve been saving money and aiming for financial freedom for many years. Being frugal has allowed us to stop working and enjoy a more relaxing life. We’re still frugal though! You can find me at TuppennysFIREplace.com