This is an ongoing series where you ask and I answer! If you have a money question, please fill out this form.
Here we go!
Thanks Tyler for asking today’s question about earning enough money:
I’ve been side hustling as well as taking classes at night so that I can apply for a promotion at my job. I’m scared that this is not enough to support my family and my growing expenses. Can you please help?
Great question Tyler, and this is something that I and many other people actually deal with on a monthly basis. It doesn’t matter how much income you earn, whether you’re living paycheck to paycheck or you’re earning $100,000 a year. These feelings are going to crop up from time to time.
Are Your Fears Real?
Just because you have this fear, doesn’t mean that you’re not earning enough. It could just mean that you have no idea what’s going on with your finances. So alleviate your fears, you really need to see the bigger picture.
Now this is an extremely scary task for some people but it’s really really important that you do it. What it is is you go and look at what is actually going on with your finances. Now you can do this over a few days.
I found that when I was first starting out doing this I got to 10 minutes before I wanted to break down and cry, then close my computer. And that’s okay. Give yourself permission to take a few days for this activity because if you’re going to freak out then it’s really not going to help you at all.
So take a look at all your bank accounts and investments if you have any. Write every single amount you have down. You can separate it by cash investments, your assets, whatever. If you own a car. Write that down. If you own a house write down the current value on that. If you have jewelry write down the amount or a ballpark estimate. Heck, even write down the value of your furniture!. How much money do you have in your wallet right now? Literally write that down.
Then the next step is to go and break down your debt. So for some of you you will see this as a net worth tracker. You’re on the right track. It doesn’t hurt to only look at it so you can update it every once in awhile. You may have acquired furniture they did you got a new car maybe you got engaged and you have a new engagement ring now.
Note: there are some tools that do this automatically for you, like Personal Capital. You can link up your accounts and you can get a good overview of what your net-worth. Sorry, you can automatically link up your jewelry or furniture with this.
After you complete the above, write down how much you make every month. If you’re self-employed or have a side hustle, you can do the whole projected income thing, where you estimate how much you’re going to make. Once you have that know then outline how much you’re actually spending each month.
For me, I was so scared I didn’t have enough money I hoarded it. I never realized I could count my jewelry! I was shocked a few years ago that I had almost six figures in assets, which definitely eased my fears.
Write Down Your Goals
If you’re married or in a relationship, it helps to sit them down to do this exercise together. What do you want, long term and short term? How do you want to see your day to day life pan out? What dreams do you aspire to accomplish? Are there places you want to travel to or purchase? Write all those down.
Once you do that, then you can start assigning dollar amounts to those goals.
Why Do You Want Money?
This is the part where you look at your goals and ask yourself why you want money in the first place. There’s no right or wrong answer for this. It’s just really what it is that you want personally. So for me, I want money so that I can go on an international trip every year. I want money so that I can, if my husband quits his job or loses it I have money there to cover our expenses. I want money so I can take care of my son.
No time for judgement here, so if you want a sports car, that’s ok!
Take a look at each and estimate how much it’ll cost. If you know the exact costs of those, great. At this point, don’t freak out about it. Yes it may seem like a big number, but stay with me here.
Now look at your list and pick the top three goals. So for example maybe your top three goals would be your car, to be debt free and to put your son in that really nice daycare. Now you’re just going to focus on those dollar amounts first.
So let’s say your car costs $75,000 and then you have your $20,000 debt. The daycare maybe per year is around $10,000. Add those up. Now you have a dollar amount for your goals. At this point you may be thinking you don’t have the money. Now, is that really true?
Break Down the Goal
You could break it down month by month, week by week day by day. Ask yourself how much will it cost you per day, per week or per month to move towards this goal. Don’t say you can’t afford this, rather, how can you afford this?
Go back to where you wrote down your income as well as your assets. Can you right now put some money towards those goals? Let’s say for example for those three goals, you need to put aside $50 a day. Can you take that amount right now and stick it in a savings account? That way, you’ll start to feel better about moving towards your goals even if you’re maybe a few years off.
If you don’t see something that pops out to you immediately, take a break. Go back to this list in a day or so. If you really can’t then this can be the time to create a new goal, maybe raise your rates for your side hustle or something similar.
Always Be Aware
Back when my freelance writing gig was a side hustle, I didn’t think much of the money I was making. Once I quit my job to do it full-time, there was a shift I had to make about why I was earning money. For me, I earn for investing into stocks, childcare and part of my rent. Even if you just have a job, make sure every single dollar gets assigned a job. Again, it has to do with making sure you’ve got that overall picture for your finances.
When we’re not aware of what is happening. That’s what we freak out. Always be aware of what your financial situation is no matter how scared you are. If you feel like you’re going to get the heebie jeebies when you’re looking at your bank account, sit with those feelings. Talk it out.
Something you can also do is list a bunch of things that you’re worried about that are out of your control. Take that list then tell yourself that there’s point in worrying about what you can’t control. Rip up that piece of paper, that always makes me feel better. And we’re doing that exercise I hope you realize that you do have the power to create any future you choose.
Let’s face it: you can afford the things that you want, it’s more you can’t afford everything that you want to. You just have to make sure you prioritize and get clear and understand what is going on with your financial picture.
Let me know in the comments below any comments you have or if these tips helped you!