For those living paycheck to paycheck (or worse), assessing your financial situation can feel difficult and downright scary. When you already feel or are poor, the last thing you want to see is it spelled out on paper. However, the exercise of assessing your current financial situation can be eye-opening and empowering. Do not be afraid. Take the first step in your journey toward a financially managed life.
Being honest with yourself and facing your fear of yourself.
The truth is no matter how much or little you earn, you are responsible for how that money is used. When we are struggling to make ends meet week to week it is easy to seek an escape through entertainment, substance abuse, or experiences. However, those choices will never improve your finances.
A bit of my story: When my wife and I first started this journey for ourselves we were a typical middle-class income family. We had two children and we each worked 40 hours a week. No matter how much we tried to save, we just could not seem to build a proper savings account. As soon as we got up to $1000 something would come along to drain it like a car repair, medical expense, or desire for Christmas gifts. We could not understand how others around us seemed to be doing so much better.
We began using budgeting software believing that would solve our financial issues. Without understanding the concept of budgeting we only tracked our expenses. However, this was a blessing in disguise. What we discovered after a few years of tracking is that we spent a lot of money on fast food and alcohol. In one year we determined we spent around $5,000 on alcohol alone. Yet we could not save and were always in the red? This was a huge realization. We came to understand that we were trying to escape our woes in life through alcohol and food. In the process, we were just wasting our money without addressing our problems.
At the time food and alcohol were our escapes which made daily life tolerable. The thought of giving that up seemed unfair and even cruel. Without a way to get rich quickly and alleviate the pressure of life, we needed some reprieve.
Looking back I now understand where I was actively avoiding the fact that our behavior was a part of our financial trouble. It was the scary realization of where our money went that helped us understand what needed to change. We have since made several small adjustments over time and each has improved our situation. It is exactly this knowledge that I want to share with you to help you and your family progress toward a better, sustainable life.