Too many people today are struggling financially, barely able to keep their heads above water. Money comes in and is immediately spent, and you’re counting down the days until your next paycheck. You think to yourself, “I work too hard to be this poor!” As you sit down each month with your budget and your checkbook, the frustration builds, and you wonder if you’re ever going to get ahead.
Taking control of your financial life is possible. Here are a few ideas that you need to come to terms with to break the cycle of financial trouble.
Earning Money Won’t Make You Rich
When you were younger, you probably thought that once you started earning money, all your problems would be solved. Then you thought, well, once I earn more money, it will all start coming together. And then you got a raise, and you started looking towards your next promotion to solve all your problems.
No matter how much you earn, you’re not going to come out ahead if you keep spending it recklessly. No, the only way to start getting control of your financial life is to start spending less than you are earning. Period.
Credit Cards Are Not the Answer
In order to establish credit, you need to open a few credit cards and pay them off regularly to show that you’re capable of making payments on time. Once you do, you should just shred them. Seriously. Don’t ever use them again.
Many people will tell you that you should keep a credit card for emergencies, but that’s a terrible idea. Instead, you should focus on building your emergency fund to rely on in case of an emergency. Credit cards are nothing but a financial pit where you pay someone a monthly fee just so that you can owe them money.
You’re Not Going to Experience a Future Windfall
One of the biggest lies people tell themselves is that they’re going to come into a large sum of cash and it will save them. The thing is that for almost all people, that cash is never going to appear. They don’t have a hefty inheritance coming, and if they do, they almost always get significantly less than they were expecting. Don’t ever count on a large sum of money to bail you out. If you get lucky and it happens, great. But if you’re counting on it and it doesn’t, you’re in a whole lot more trouble than you thought you were.
You Are the Only Person Responsible for Your Finances
It’s easy to blame parents for not instilling good financial habits in you. Or the ex that was fun but impulsive that you just couldn’t say no to. Or the kids and their extra-curricular activities. It’s very easy to sit back and let someone else take the blame for your financial problems, but the fact is, you have to stop blaming others and start owning your circumstances. Admit that you made some poor decisions in the past. Learn to tell your family that extras just aren’t in the budget. Decide to do better.
You Need to Do More Than Save
In today’s economy, a savings account just isn’t going to cut it. You want to have one to keep your emergency fund in, but beyond that, you really need to set some investment goals. Most savings accounts today offer 1% or less in annual returns, which is less than average inflation. Parking your money in a savings account will make that money worth less when adjusted for inflation. Begin to invest your money if you want to see real growth.
Once you truly learn to accept these ideas, you can begin to work on changing your mindset and taking control of your finances.
This is a Guest Post by Alana Downer. Alana is a financial adviser, an occasional finance blogger, and an absolute coffee addict. Currently supporting Learn to Trade – experts in the field of investing and trading. She is often be found online, sharing her tips about getting out of debt and achieving financial independence with online readers.