When you got a pay raise, what hopes did you have for this new money in your budget? Maybe you thought you’d have enough money to put toward your financial goals, such as saving more or paying off debt.
But now, all your efforts to manage your higher income feel like you’re spinning your wheels. Any gains you saw when you started earning more have disappeared — and you don’t seem to have anything to show for it.
If you’re earning more than before but feel as broke as ever, you may be financially stuck. Here are some common issues that could be blocking your financial progress, even as you’re making more money.
1. You’re missing your main money motivation
A growing savings account or shrinking debt balance aren’t inherently rewarding for most people. The typical person probably doesn’t find it exciting to manage money.
If you feel the same, then improving your finances might not be a motivation for you. But remember it can allow you to pursue the bigger goals that you care about. By making the connection between your bank accounts and your aspirations, you’ll see why managing your money matters.
Consider a major life step you’re working toward, such as starting a business, moving in with a significant other, becoming a parent, or buying your first home. You may want to achieve financial freedom and reduce the stress you feel over money. Then, determine the financial steps you’ll need to take to achieve the goal. Having a financial plan built around what you want out of life will keep you motivated.
2. You’re spending mindlessly
As you earn more, it’s natural to be less strict with your budget and spending. But this relaxed approach can turn into mindless spending when you buy items based on impulse, convenience, or even boredom, rather than on what’s important to you.
This overspending can show up in two areas: eating out and entertainment. The top 20% of income earners spend nearly six times as much on alcoholic beverages than the lowest 20% of earners, according to a 2017 analysis by Business Insider. Higher earners also spent 5.7 times money more on reading and 4.7 times more on entertainment.
Revisit your budget, and audit your expenses to see which nonessentials are eating into your spare cash. Practice being mindful with your money by checking in with yourself whenever you spend to ensure that your purchases align with your bigger money goals.
3. You’re deep in debt
Whether you have six-figure student loans or credit card balances that are out of control, high debt payments can feel like a financial trap that not even a higher salary can help you escape. You might not feel like you’re in a crisis, but your debt could be holding you back from making the financial progress you want.
If your debt payments are high compared with your income, consider strategies that can help you manage them. You might want to hit the reset button on your debt through student loan consolidation. With this option, you might be able to lower your monthly payments and interest rate.
With a decent income, you likely can find money in your budget to make extra debt payments, too. The debt snowball and debt avalanche methods can help you pay off debt in smarter, faster, and cheaper ways. And with each loan you pay off, you also will eliminate a monthly payment and increase your cash flow.
4. You don’t know what to do with money
Earning more money doesn’t mean you automatically know what to do with it. As your pay increases, you’ll have more money to manage — and you’ll need to update your financial strategies to keep up with it.
Start expanding your personal finance knowledge, and you’ll find ideas and strategies to help you do more with your money. It could be as easy as picking up a new book about personal finance or subscribing to a podcast that talks about money.
Learning more about money will equip you with the knowledge to transform your higher paychecks into financial security and lasting wealth. You may find yourself making more informed decisions about your money and building sustainable wealth faster.
5. You’re falling into the comparison trap
Perhaps you question yourself and your financial situation when you feel you’re falling short. This could be a sign you’ve fallen into the trap of comparing yourself to other people or hold yourself to an unrealistic standard.
For example, you might wonder why other people have a nicer lifestyle or fewer money worries than you. It can feel like no matter how financially comfortable you get there’s always someone else who appears to be doing better.
Such irrational money thoughts and feelings of discouragement don’t motivate you to keep working on your finances. Instead, they blind you to the progress you’ve made and can leave you feeling powerless.
Try to practice recognizing this trap and working your way out of it. Keep a money journal or other record of your financial wins, and use it to remind yourself of the progress you’ve made. If you compare yourself to others, remind yourself that you may not always have everything you want — but with a focused effort, you can achieve your most important financial milestones.
Make your money work for you
Money alone won’t solve financial problems. You may have a decent income, but you need to actively manage your money to make the financial progress you want. If you’re stuck living paycheck to paycheck even as your earnings grow, it’s time to make changes.
Identify a financial goal that will build lasting wealth, such as upping retirement savings, paying down debt, or building an emergency fund. Then tweak your budget and reallocate funds toward your main money goal. You might be amazed by how fast you see results.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 6.97% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.30% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate|
|2.47% – 6.30%1||Undergrad & Graduate|
|2.51% – 8.09%4||Undergrad & Graduate|
|3.02% – 6.44%2||Undergrad & Graduate|
|2.69% – 7.21%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|