As a mom, one of your most important duties is to provide for your family, but it’s not always easy. Raising a family is an expensive business, and it can feel like you’re constantly waging war with your budget to give them what they need. Most moms fantasize about winning the lottery to solve their financial issues, but as a new piece from The Washington Post reveals, more money isn’t always the right answer. It’s how you spend what you have that’s more important.
America faces a savings crisis
Nearly 25% of all Americans are considered low-wage workers, but it’s not just minimum wage workers who are struggling to get by. A recent study published by Bankrate estimates roughly 6 in 10 Americans don’t have enough money set aside in savings to pay for an unplanned expense of $500 or more. This figure includes those raking in more than six figures. Even the top one percent of earners in the U.S. are struggling to put aside savings.
Who cares about the one percent?
It can be hard to have much sympathy for the savings-poor rich, but the reasons why these top-earners don’t have savings offer a teachable moment for anyone facing financial issues. According to Lori Atwood, a financial advisor who spoke with The Washington Post, they’re spending too much money on their fixed costs. The lifestyle of the rich and the famous is an expensive one to keep up, so things like housing, utilities, childcare, and loan repayments take up too much of their budget.
Sound familiar? That’s because fixed expenses take up the majority of any budget, regardless of how much you earn or spend. Though these costs will naturally dominate your budget, you shouldn’t be overspending on any one category of expenses. The plight of the rich is a lesson to those who make less. You can’t always blame your situation on how little you earn but how much of your income you spend.
Variable expenses aren’t harmless
Atwood says the rich are also spending too much on variable costs like takeout. They’re spending so much time at the office that they don’t have the time or energy to cook in the kitchen. They hit up the drive-thru as a quick fix instead on most nights. In one case, Atwood said a family of four spent $500 at McDonald’s over the course of just one month.
Again, this might sound familiar — though maybe not the $500 bill. Everyone is busy — especially families — so it’s easy to rack up a lot of individually small expenses like takeout. Though they may save you time and energy spent in the kitchen, these purchases can add up to do considerable damage to your budget.
The solution involves a reality check
It’s time to face the facts. Chronic overspending limits your financial flexibility, preventing you from doing everything from covering unexpected repairs to preparing for your retirement. Savings are your family’s safety net, and you need to start spending less if you expect to have one.
Financial experts suggest focusing on smaller variable expenses at first because these are the easiest to change. Consider relying on take-out less often. Though you’ll have to spend more time in the kitchen, this change in habit is a lot simpler than moving to reduce your fixed housing costs.
There are a ton of helpful guides for families looking to reduce their spending on variable expenses, like eating out, groceries, entertainment, and clothes. While you’ll still need to do the heavy lifting to reduce spending, these guides offer tips to ease your transition from a thoughtless spendthrift to a savvy saver.
Don’t be put off by hard work
At first, it will be a slog, and you’ll face challenges. Your family may put up a fight when they’re denied the little extras they’ve come to expect. Or you might deal with unexpected expenses that ruin your attempts at saving. You may have to take your cat to see a vet after it swallows a rubber band; your car, which you rely on in order to get to and from work each day, might need repairs; or you need to call a plumber if a leaking pipe threatens water damage to your home.
These emergencies shouldn’t discourage you from saving. The trick is to get over them as quickly as possible. A growing number of cash-strapped moms are turning to online loans for fast and convenient financial assistance. Online loans don’t share many of the same complicated barriers that traditional lenders use to assess their customers, so you can receive your cash advance in as little as one business day.
In some cases, lenders like MoneyKey offer installment loans that work differently from other short term loans. You can get an installment loan online that lets you pay back what you owe over several installments rather than one-lump sum, taking some of the pressure off your budget. Otherwise, these online installment loans work just as well as an emergency backup to bills and repairs.
Graduate from small to large changes
Eventually, less spending will mean you save more. You’ll be able to contribute more than just the minimum payment to your credit cards, and you’ll be able to put more towards your household’s emergency fund, your children’s college fund, and your retirement.
More importantly, over time, you’ll have more expendable cash to invest into larger changes that reduce how much you’re spending on fixed expenses like your utility bills or housing. Whether that’s investing in an energy efficient replacement for your 20-year-old furnace or moving to a less expensive area of the state, these bigger lifestyle changes will have a huge impact on your budget. Once you get to this point, you’ll be able to save even more.
Learning to live below your means is hard, but it’s a necessity for your family’s financial well-being. While it’s fun to imagine what it would be like to win the lottery, the chances are slim you’ll ever buy the lucky ticket. Financial responsibility is grounded in reality. Ditch the fantasy and focus your attention on things you can control, like how much you spend each month. Savings is an attainable goal when you take control of your spending.