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The cycle goes something like this. Money comes in, money goes out, and round and round we go. If you’re making a healthy salary and you’re still coming up short at the end of each month, there’s a problem. The problem is that you’re making too much money to be broke. Yet here you are…broke, nonetheless. I’m going to let you in on a little secret, broke is normal. So don’t worry, you’re normal. Yay! But wait, who wants to be normal?! You obviously don’t, or you wouldn’t be here. Let’s face it, that high salary wasn’t just handed to you overnight. You worked for it. Now, let’s figure out how you can go from broke to no financial joke in one blog post.
Broke Is Normal
High salary or not, look around you and you’ll likely see your friends buying bigger houses, new cars, and subscribing to HDTV cable packages. Along with that goes new clothes, dinners out, big mobile phone bills, traveling sports teams for the kids, and extravagant summer vacations. In order to keep up with this kind of lifestyle, even for high-salaried couples, you’re probably going to be broke.
Of course, I understand high salary is relative. Even if you are on the upper spectrum of high salary, unless you’re pulling in celebrity cash, you’re still going to be broke. Why? Because you’re just going to buy even bigger houses, better cars, and even more lavish vacations. It’s all relative.
At the end of the month, if you’re not able to save a significant portion of that high salary, you’re teetering on the verge of financial destruction. You might even benefit from a financial intervention. See more about those here!
It’s really simple to figure out if you’re broke. Subtract all of your monthly expenses from your monthly income. If you’re negative – you’re broke. If you’re close to negative – don’t get excited – you’re also broke! There was a wonderful book written by Thomas J. Stanley, PhD, titled, Stop Acting Rich. You might want to read it.
Don’t Be Normal
Most normal people will live at their level of income – or beyond it. If you’re consistently finding yourself with more month at the end of your money – you’re spending more than you earn and you need to fix it. Fast. In fact, you might not even realize you’re spending more than you earn. Oftentimes, it can take years (seriously, years) to have it catch up with you. Monetary gifts from mom and dad, tax refunds, and annual bonuses have a tendency to mask financial problems.
Besides, why should you care that your credit card is up a few thousand bucks – mom and dad always give you $5k for the holidays anyway. But, what if they didn’t? What if mom and dad decided to buy you some new furniture this year? What if you didn’t get the $5k you were counting on? It happens. And when it happens to you, you’ll realize you’re spending more than you make. #StopIt
Why does everyone want to be an individual, except when it comes to their money? When it comes to money, it seems like everyone wants to live a robotic existence – buying the same houses, the same cars, the same clothes, the same everything. What happened to individuality when it comes to money? If you want to show off your individuality, stop doing what everyone else does. If you employ this strategy with your money, you’ll be trading your day job in for margaritas on a beach in no time.
How To Stop Being Broke With A High Salary
The quickest fix to stop being broke with a high salary is to Live Below Your Means. It’s the oldest wealth-building secret in the book, and yet it escapes most of us. Believe me, my husband and I are the exceptions, but we weren’t always. We used to do the same things everyone else did. We bought the houses, the cars, the clothes, and the HDTV packages. Check out all our mistakes before we became early retiree enthusiasts!
- Figure out where your money is going
- Analyze your spending – we use Personal Capital to track our money – it’s FREE!
- Stop wasting your money
- Create a budget
- Stick to your budget
- Invest the difference
- Live stress free and happily ever after
If you make too much money to be broke, you might want to take a quick inventory of what’s coming in and what’s going out. Chances are, you’ll be able to make a few modifications TODAY that will save you hundreds, if not thousands, every month. Once you get the financial ball rolling, keep it moving by making more modifications to your monthly habits.
Eventually, you might even find yourself staring down the possibility of early retirement. You might not be on par to retire in your 30s, but early retirement at any age is quite an accomplishment. You’d be surprised how quickly couples with high salaries can build wealth, especially when they stop being broke and start living below their means. You can do it, too. Be an individual. Go against the grain. And wonderful things will happen.
Have you ever realized you were spending more than you were earning? How did you turn it around?