According to a recent report, more than 50% of millennials who earn an annual salary of $100,000 or more are still living paycheck-to-paycheck. Inflation and lifestyle creep are commonly identified reasons for this, but I believe there are more underlying factors that contribute to the struggle to get ahead financially.
Reason #1 Lack of Vision
It’s important to have long-term goals in life. When you don’t have a clear idea of what you want to achieve in the future, it’s easy to fall into the trap of lifestyle creep. You may have worked hard to establish your career or business, and once you start earning a six-figure salary, it’s perfectly fine to enjoy your hard-earned money. However, it doesn’t negate your responsibility to secure your financial future. Take a moment to envision where you want to be in 5, 10, 15, or even 20 years from now in terms of career, finances, and personal life. Then, execute a plan and take the necessary steps to make it happen.
Reason #2: Lack of clarity
We can lack motivation to pursue our long-term goals because we don’t have a clear understanding of why these goals matter to us. Many people tend to follow what is expected of them. Doing what is “supposed” to be done without questioning if it truly aligns with their values. Take a step back and evaluate what truly matters to you. Doing so will make you one step closer to the financial stability you desire.
Reason #3: Lack of Planning
A well-planned budget is an important tool for gaining control of your finances. I’m referring to an actual budget. Not a basic knowledge of how much you spend on rent and car payments, while the other categories are rough estimates. I’m talking about having a detailed, zero-based budget that considers every expense, including something as trivial as treats for your furry friend.
Without a budget, you’re more susceptible to getting caught up in mindless spending, subscription trials you forget to cancel, and impulse purchases that only add to the clutter. By creating a detailed budget, you’ll have a clear understanding of your financial situation, which allows you to make the adjustments that will lead to economic stability.
Reason #4 Lack of Follow-Through
It’s not enough to create a budget; you actually have to follow the budget. It takes a considerable amount of time and effort to meticulously organize expenses into detailed categories and calculate allotments down to the last cent.
Once you’ve put in the work, don’t make the mistake of abandoning the budget to impulse expenditures for the month, then circle back to see how close you came to sticking to the plan. Now granted, when you start budgeting, you may have to make adjustments, but once it’s set and you know your numbers, don’t deviate from it. Sticking to your budget will help you make progress toward improving your financial well-being.
Reason #5 Lack of Discipline
It’s common to struggle with people-pleasing, comparing ourselves to others, and seeking instant gratification. However, to maintain financial health, you must overcome them by learning to say NO. The upcoming weddings, birthdays, or baby showers may feel like an obligation to attend, but it’s okay to decline an invitation if the cost is too high. It’s not worth maxing out your credit card or over drafting your bank account to maintain a relationship.
Similarly, parents may feel the need to pay for expensive extracurriculars they can’t afford. Moms & dads, it’s okay to prioritize your time and money. There is no obligated to help family members because you’re the one who “made it out.” Comparing yourself to co-workers and colleagues who are enjoying more luxurious lifestyles can lead to you overspending to keep up with the Joneses.
Focusing on yours and your family’s needs, gratitude, and radical honesty with yourself makes it easier to say no to things that don’t align with your plans. While some relationships may be strained, it’s an opportunity to mend them or make room for new connections that support your values.
Reason #6 Lack of confidence
When you face financial difficulties, it can take time to recover from the impact it has on your mindset. Before you can begin the process of bouncing back, it’s important to understand your relationship with money. Maybe you grew up in a household that struggled to make ends meet, or you may have once been wealthy but lost everything.
When you start earning a large sum of money, you may subconsciously continue with the negative financial patterns you’ve become accustomed to or have a limiting belief that you don’t deserve this money. Examining how past experiences have shaped your perception of money can help you become more self-aware and change the habits that no longer serve you in this next chapter of your life.
Final Thoughts
The cost of living is undeniably high nowadays. It does not change the fundamental rule of mathematics that your expenses must be less than your income. Wealth is a gradual process and requires patience and diligence. You will need a vision, a plan, motivation, self-discipline, and self-awareness to obtain it. Take time to assess these six areas and start making changes to break the cycle of living paycheck to paycheck and begin building generational wealth.
