We Make More Money Than Before. Where Did It All Go?

One of the biggest financial myths...

“When we make more money, it will be easier to save.”  

“I will save more when I get a raise!”

“Life will be so much easier when I make _____ amount of money.”

Have you heard these?  Have you said them yourself?

It is common for people to make higher incomes as they get older.  It is less common that those same people will save more.  More likely is people after 5-10 years later ask themselves the title of this post… "Where did it all go?"

Lifestyle Creep

A common problem for Americans is lifestyle creep.  As a worker advances her career, she might think that her financial picture would improve.  This is often NOT the case!  As income increases over the years, expenses likely go up as well.  

People soon find out that they also have more burdens as time goes on.  They buy a home.  They get married. They have kids (which I’ve heard can be expensive).  Health insurance premiums rise.  A new car is needed. They move to a bigger home.  More and more obligations arise.  

They were living paycheck-to-paycheck before, and they live paycheck to paycheck today.  

Does this sound familiar to you?

Waiting until you can afford to save is a loser’s game!

Rules Rule!  

One way to combat this all too common problem is to SYSTEMATICALLY allocate your saving/spending budget when income goes up.  By having a rule beforehand that you are committed to following will help you defend against lifestyle creep while at the same time give you permission to increase spending over time.  

An example: Have a rule that every time you get a raise at work, half goes to financial goals and the other half goes for increasing your lifestyle.  

If you get a 4% raise at work, you will take 2% and increase your 401k contribution, debt repayment plan, or whatever your financial goals are.  The other 2% you are free to add to your expenses.  You might say, “But I need all 4% for my obligations to my family!”  And that is the point.  You will always have new obligations that are important and you will likely never get around to saving more.

Put your financial goals ahead of your current comfort. Trust that eventually, you will get to the point where your consumer debt is gone and your retirement savings are on track.  Then, you will feel comfortable with your decision.  

Contrast this to the family who NEVER gets to the point where they are on track and as a result always has financial stress and anxiety.  

The SYSTEM  will save you!

One Trick to Keep Your Spending Under Control

Many families find it difficult to keep their spending under control.  Have you ever asked yourself, “Where did our money go?  We are making more than before, but things seem as stretched as they have ever been!”  This is a common problem.  People make higher income over time but don’t know where it all goes.


The step that can change your finances forever!


So what is the trick?  Get it out of your hands before you have a chance to spend it!  Most people get their paychecks automatically deposited into their checking account.  Now… go a step further!  Get on your bank’s online account access and take a percentage (I encourage 10%) and have it automatically transferred out of your checking account the following day after you get paid.

Many live paycheck-to-paycheck.  If you take 10% and get it out of your account, and live paycheck-to-paycheck with the rest you have just made your financial future better!  Where should you send this money?  It depends on what your biggest goal is.  If emergency savings is your main problem, put it into a savings account.  If you are behind on your retirement savings, send it into your Roth IRA.

Most people inherently understand that living below your paycheck and keeping debts low is the key to long-term success.  This is the step that makes it happen!  Don’t let another day go by before you make this change!  This is THE KEY!  Most of us will find a good reason to spend the money if you have access.  So, get rid of it!  Make it move in the right direction.

“But I can’t cut 10% out of my spending!” you might say.  

Have you tried?  How did you make it when your income was 10% less?  You will most likely find a way.  

What if you would have done this 10 years ago?

How different would your financial picture be if you had started this years ago?  How much happiness came from that extra 10% of spending?  Compare that to how much happiness would have come from saving it!  

Are you are stressed about your debts, lack of retirement funding, lack of emergency saving?  I would bet that saving that last 10% would have been of more value to you than the value you received by spending it.  

What about the next 10 years?

10 Simple Ways Teachers Can Save Money

It can be difficult to save money.  Most of us have struggled with this for our entire lives.  Here are 10 things you can try in order to save some cash. You CAN save money!!

#1 Pay Yourself First.  

The most successful way to save is to get rid of your money before you have a chance to spend it.  The key is to set up an automatic transfer from your checking account into a savings account literally the day after you get paid.  Try starting with $50 per paycheck and increase it over time.  Eventually, you won’t miss this money because you don’t ever see it.

#2 Save your 3rd paycheck.  

If you get paid every 2 weeks, there will be two times each year when you will be paid three times in a month.  Commit now to never spend this money!  Instead place this into emergency savings.  If you budget your spending for only two paychecks each month, this is an easy way to find some extra cash.

#3 Save your coupon savings.  

If you use a coupon, don’t let that saved money get spent.  For example, if you use a coupon for $1.00 OFF a box of cereal, don’t buy a dollar of more food.  Instead, put this saved dollar into your savings account.  This could turn into quite a sum over a year's time.  Every dollar adds up.

#4 Track your spending.  

Know where each and every dollar you spend goes.  Categorize it.  I have found that many of my clients when doing this for the first time, make different spending decisions.  They usually spend less just by knowing where their money is going.

#5 Use the library.  

As teachers, many of us love to read books.  Ask yourself what you usually do with the books you purchase.  If they usually just sit on a bookshelf for years, then was it worth buying instead of renting for free?  Next time you go to the bookstore, write down the titles that you want to buy and go to the library to get them.  You can even ask the library to order newer titles if they currently don’t have the book you want.  Now save the amount you normally spend on books.  For many of you, this can turn into quite a pile of cash.  

#6 Match your habit.  

If you have a habit of buying non-essential items (mine is Mountain Dew), for every dollar spent on that habit each week, save the same amount into your savings account.  If you can’t afford the match, you can’t afford the habit!

#7 Go on a spending fast.  

Once in awhile, don’t spend money on non-essential things for an entire week.  No going out to eat; no snacks at the convenience store; no new clothes; no movies or activities that cost money.  Save the money you would normally have spent that week.  Replace these activities with free alternatives with your family.  Go on walks or to a park.  Play board games.  Read a book. (From the library!)  You will probably have just as much enjoyment as if you had spent the money.

#8 Shop around for at least one service.  

Call your cable company and see if you can get your price lowered.  Check other insurance companies and have them run quotes on what your current coverages would cost.  Contact your current insurance agent and see if there are discounts you are not taking.  Shop around for a cheaper cell phone plan.  The small time it takes to shop around could save you money every month to re-direct to your savings.

#9 Take the 52-week savings challenge.  

During week 1, save $1.00.  For week 2, save $2.00.  Week 3 you add $3.00.  Keep this going week after week and finally, in week 52 you will save $52.00.  At the end of one year, you will have saved $1,378!  Click HERE if you want a pdf of how this works.

#10 Go and execute number one on this list!  

Seriously, paying yourself first is the best way!  So don’t delay!   If you try to spend first and save second, it won’t happen.  If you don’t make it automatic, it won’t happen.

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