5: 3 Steps to Take When You’re Spending More Than You Make
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Hey everyone, and welcome back! If you're joining us today, I'm so glad you're here. In our last episode, we had some real talk about the two most foundational pieces of your financial journey: knowing your numbers—your income versus your expenses—and the power of defining your priorities.
I challenged you to get clear on your priorities. To dream a little about what you want your life to look like and what you're willing to do to get there. Because while your numbers tell you the truth of your situation, your priorities are the powerful emotional fuel that will get you through the uncomfortable parts of this journey. They are what turn a sacrifice into a confident, intentional choice.
Today, we're going to put those priorities to work. We're going to dive into the three immediate steps you can take to make sure your money is no longer working against you, but is actively helping you build that life you just dreamed up.
Ok, so you’ve compared your income—your salary, any side hustle money, maybe a little extra from selling things on the side—and you compare it to your expenses. And you have a negative number. Meaning you are spending more than you are bringing in each month, which is not a sustainable place to be in. So, in order to get your finances right side up, here are three steps you can, and should, take immediately to get yourself moving in the right direction.
Step 1: Stop the Bleed
This is the emergency brake. When you realize you're spending more than you make, the first thing to do is to put a temporary stop on all non-essential spending. This doesn’t mean you have to live in a box and eat ramen noodles for the rest of your life. This means you’re pressing pause on any purchases that aren’t absolutely necessary, for the time being. I love the analogy of thinking about it like turning off the faucet to a leaking pipe before you can fix it. This step is just about pausing the immediate chaos of water flooding your bathroom so that you can sit back and assess the situation in a slightly calmer state of mind.
This might look like:
Eating at home and not grabbing take-out on the way home or going to a restaurant for a week.
Putting a hold on any new clothes, books, or random online shopping.
Pausing any subscriptions you're not actively using right now.
Remember, this isn't about restriction; it's about giving yourself a moment to breathe and get control. It’s a way to immediately create space in your budget and stop that negative flow. Plus, it's a way of saying, "Okay, I'm in charge now. I'm going to take a moment to assess the situation before I make any more spending decisions." This is a quick win that can give you a calm, confident feeling about your money right away.
Step 2: Find the Leaks
Once you've stopped the bleeding, it's time to dig a little deeper. The next step is to get crystal clear on where your money is actually going, but try to do it without any judgment.
Remember that "mental accounting" we talked about? This step is about replacing that with real, concrete information. You're not doing this to feel bad about where you've spent money in the past. You're doing this to get the data you need to create a plan for the future.
Before you try to use any budgeting apps, I’d suggest you start with a simple pen and paper or spreadsheet if that works better for you. I also have a free expense tracker on my website that you can download to help you get started.
First thing you’ll want to do is to pull the last 2-3 months of statements from all of the accounts you use (so checking and any credit cards) and go through each line item and give it a broad category like food, shopping, household, or kids expenses. Then, add up each line item for a category and divide it by the number of months of statements you are looking at. This is a starting point for the average you spend in that area each month.
It’s also important to note that you are looking at everything here, not just the big bills you pay each month like rent and your car payment. Usually, the leaks are the seemingly small expenses. Buying lunch at work every day, the quick trips to the grocery store for just a few things, the streaming service you forgot you signed up for, or stopping at a gas station for an energy drink in the afternoon. These expenses add up much more quickly than you realize.
Again, this is not about judgement or pointing fingers. The goal here is just to observe. You're simply gathering information.
Which leads up to…
Step 3: Make Intentional Cuts
Now that you have all the information, you can make a plan. With your expenses laid out in front of you, you can decide what stays and what goes. This is where you get to align your spending with your values.
For example, the streaming service you signed up for on a Black Friday deal last year? The one that lured you in for a dollar a month for the first three months but now is costing your $24.99? Is it truly bringing you joy? Or would you rather put that money towards a car repair fund or an extra debt payment each month? Look at all of your expenses with this new, critical eye. Does the feeling of having that new item or paying for that service outweigh the feeling of security and confidence that you’re looking for?
This is the power of knowing your priorities before you start examining your expenses. Before you did this, everything seemed important. Now, you’ll likely find it easier to say no to some things.
I also want to note that this is not about saying goodbye to things forever. It’s about being deliberate. It's about deciding what is truly important to you right now and making sure your money is aligned with that.
Knowing your numbers and defining your priorities are the foundation. And taking these three steps—stopping the bleed, finding the leaks, and making intentional cuts—are the action you take to start building.
This isn't about living a life of scarcity. It's about finding that calm, confident feeling with your money. It's about creating a plan so you can spend and save with confidence. It's about building a positive relationship with your money so that you can use it as a tool to create the life you truly want.
Because remember, your biggest, wildest dreams are within reach. Let’s make some money moves so that you too can start to experience financial freedom.
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