Making more money always sounds like a great thing that will improve your life and allow you to do certain things that you could not do before. Whenever we have an option to earn more money most of us do not even blink an eye, we immediately accept the offer and start planning with the belief that this extra money earned will help us save more, reduce our credit card debts and lower the amount on our cumbersome loans. You are not wrong to think like this at all, in fact, you are correct but the reality is after getting a raise or acquiring a better paying job, a few months down the line you realize that you are not, in fact, saving more or paying off your debts any faster than before.
If you have found yourself in this situation and have wondered how it is that you are not any better off now than before. Well, you are not alone, most of us have either found ourselves or currently are in such a situation. Sometimes it feels like the more money you make the more problems you must deal with and you never seem to attain that financial stability that you so desperately need. “So, where does all that extra money go?” You might ask. The simple answer is, that money does go into your bank account/wallet, it is just emptied out before you realize what happened and so you feel like you did not make any extra money. This is the harsh reality for most of us, sometimes you might even realize that you were saving more money when you were getting paid less and now you are paid more but do not save nearly as much as you did before.
In order to help you understand how you spend your money regardless of whether you were given a raise or you started a better paying job you must do a thorough review of how you have spent your money in the past several months. First, you will need to gather all your account statements since the beginning of this year (which in this case would be January 2017) to the point in time when you are reading this article. Most banks should have this information available to you via their online banking website or mailed out to you if that’s how you receive your statements. If neither of these works for you then you can get in contact with your bank and request this information. If you made many cash transactions since the year began, then try to estimate in total how much you spent and where this money may have been spent.
Once you have gathered all your account statements and are up to date on your transaction history. You will need either two different colored pens or two different colored highlighters. You will then take your account statement for the month of January you will use one pen/highlighter to either circle or highlight the amounts you spent on necessities (things like rent, groceries, utilities, tuition, etc..) things like eating out shopping for non-essential needs should not be included in this category. Then you will use another pen/highlighter to mark down all the other amounts you spent. Once completed proceed to the next month and do repeat, do so until you have gone through all your statements then grab a calculator and add up all the numbers highlighted in each color for each individual month.
Once added up, have these numbers handy, in the next article we will go over the next step in figuring out how your money was spent and possibly even methods in which we can change these numbers moving forward and break out of this vicious cycle of making more but saving less. So that the next time you do this exercise you are not overly surprised by the figures you see.