Managing your finances is far from simple.
You have bills, needs, wants, saving and investing for retirement competing for your money.
If only you had more money, surely this whole personal finance thing would be easier to manage, right?
While more money could solve your problems in theory, it doesn’t always work out that way.
Yes, earning more money is a good thing. If you’re not making enough to get by, you definitely need to work on earning more.
That said, once you exceed a certain income level, financial problems are more than likely due to the way you manage your money, not due to the fact you don’t earn enough.
Here are a few reasons why earning more may not be the answer to your problems.
Earning More Usually Means Spending More
Unless you have a budget in place, earning more almost always means spending more.
In the beginning you might start buying more convenience items. Maybe you go out to eat more instead of cooking at home. You might hire a service to mow your yard or a cleaning service to clean your home.
As your income continues to increase, you start buying more expensive versions of the same item. Rather than buy a Honda car, you buy an Acura car. You upgrade your home to a larger and fancier house.
Unfortunately, this cycle never ends. You can keep buying more convenience items and services as well as fancier versions of things forever. There is always someone that has something nicer.
If you get caught up in this awful rat race, earning more money will do nothing for your except increase your expenses. In fact, it very well could increase your debt as well when you buy fancier cars and houses.
If You Can’t Manage What You Have Now Then What Will Change Later?
Poor money management skills is the root of many money problems. Unfortunately, earning more money won’t make the problem go away. Sadly, it could intensify the problem as your monthly bills grow with your new income.
The only way to make sure a larger income helps your financial position is learning about money. You need to learn how to create a budget, the difference between needs and wants as well as how to pay off debt.
Once you’re in better financial shape, you’ll also need to learn how to invest for your future. Learning these concepts is free. There is a wealth of information here on Money Manifesto and the internet as a whole that could completely change your financial life.
Getting a raise or earning more money can’t teach you these things.
You’re Always Chasing The Next Best Thing
When I was younger, I’d often think that if I could just afford to buy a certain thing, I’d be much happier.
Wanting to avoid debt, I’d save the money for the thing and purchase it. I’d be happier for a little while, then I’d get used to the new thing and want something else.
There is always something you’ll want that you think will make you happy. Unfortunately, the happiness is usually fleeting.
More money can help temporarily, but unless you figure out how to be happy without things, you’ll always be chasing the next best thing.
Money Doesn’t Solve All Problems
Money won’t solve all of your problems, even if you think it will. There will always be things money can’t buy. Money can’t buy you real friends. It won’t be able to reverse bad health habits. It won’t make a failing marriage better.
Yes, money can give the illusion of making these things happen, but when the money disappears, so will the results.
Still Think You Need More Money?
If you still think you need more money, there is a chance you do. If you’re struggling to meet real needs, not wants, then you definitely need to do everything you can to earn more.
However, if you’re simply struggling with wants, you may want to reflect and see if you have good money habits. If you don’t, you can always develop them.
Then, when you come across more money, you can successfully use it to reach the goals you set for yourself, rather than allowing your money to do its own thing and sabotage your financial health.
Do you think more money will solve your problems? If so, why? If not, why not? What could you do to earn the extra money you need and what would you use it for?