‘Spend less than you earn.’ We often come across this advice. Not just from financial experts but from our elders as well. Especially in a country like ours, where since childhood we are advised to ‘Live well within your means.’ So anytime we are short on money, we quickly resort to pinching pennies. Failing to realise that our income could be the spoilsport.
But how can you spot the culprit? Is it your income or expenses?
Here are 5 signs to know if you are earning enough:
You find yourself borrowing for necessities or miss bill payments
Always borrowing for your daily consumption and minimalist lifestyle choices suggest you might have a big problem. As your salary alone should cover those expenses. Even delayed bill payments and missed EMI payments indicate trouble.
Borrowing occasionally is acceptable, but doing it often is not. Don't look for ways to cut on your already stripped-down budget. Instead, acknowledge that you need to earn more and take corrective steps.
You always run out of money in the first few days of the month
Eagerly awaiting for your paycheck and running out of money in the initial few days itself is not a good sign. Ideally, your earnings should cover all your expenses leaving you with surplus funds to save and invest. Sure, you might experience some bad months occasionally. But running out of money every month on a minimalistic budget indicates low earnings.
The thought of upcoming expenses make you anxious
There is a big difference between worrying about paying for house repairs and stressing over your routine utility and grocery bills.
It is a bad sign if paying for necessities keeps you up at night, stressing. As worrying means something is amiss. Maybe you have large debt payments or need to earn more. Whatever the reason, worrying and dwelling over it will not make it go away. You need to take charge and work towards resolving it.
You have never achieved any financial goals
If you are not progressing on repaying your debt or saving for your future home, its a cause for concern. Although it might not seem like a significant issue now, over time the problem will get worse. As no good can come from piling on debt and interest payments or not saving for future goals.
Whatever your financial goals, you need funds to realise it. Earning more can help you reach those financial goals sooner.
You have no savings
If you are:
a new home-buyer or
a new entrepreneur pumping money into his business or
have just repaid any other kind of loan
Then having no savings over the near-term makes complete sense. But if there is no other valid reason, you are probably not earning enough. As any form of savings is essential.
You must keep some money earmarked for emergencies and save towards future financial goals. But if you are always struggling to achieve that it means you need to earn more.
And there are several ways to accomplish that:
Look for another job that pays more
Find an alternate source of income. The advent of the internet has opened up a lot of opportunities. You can now easily earn more from the comfort of your home.
Develop a new skill to add to your resume so you can earn more.
The sooner you assess the problem the faster you can resolve it. As not earning enough can keep you from progressing in life even if you spend less. It can help you succeed in budgeting and lead a debt-free life.
The key is to address at a young age to prevent it from causing permanent damage and ruining your financial future.