Not every paycheck-to-paycheck cycle is caused by poor spending habits, sometimes the root issue is your income.
In this episode, I unpack the three most common reasons people face an income problem, and why acknowledging it isn’t about shame but empowerment. From cost-of-living mismatches to household changes to underearning, I explain how to identify the real gap in your budget so you can finally make a plan that works.
Through client examples, including Emily’s story of adding income to ease her family’s finances, you’ll hear how reframing an income problem can lead to solutions that actually support your lifestyle and values. Because the truth is, you don’t have to cut back harder or live with guilt. You may simply need to earn more.
Listen in to learn:
- [01:40] How to know if your paycheck-to-paycheck cycle is mindset or income
- [04:12] Why cost-of-living mismatches create hidden income problems
[07:58] Household and lifestyle changes that shrink your paycheck overnight - [12:40] The trap of “money ceilings” and underearning
- [17:15] How to identify the real gap between your income and expenses
- [21:45] Why knowing your numbers is empowering—not shameful
Tune into this episode of Money Files to discover how to identify and solve income problems so you can finally stop living paycheck to paycheck.
Are you ready to start asking for help with your finances? Apply to work with me, and let’s start working towards your financial goals.
If you loved this conversation about identifying an income problem, check out Episode 192: From Panic to Peace: “Even Looking at Bills Made Me Panic” (Emily’s Story). Together, these episodes will help you see the real root of your paycheck-to-paycheck cycle and how to break free from it for good.
Transcript for “ How To Know If Your Paycheck to Paycheck Cycle Is An Income Problem”
Hi and welcome to Money Files. I’m Keina Newell from Wealth Over Now. I work everyday with professional women and solopreneurs to help them get out of financial overwhelm and shame so they can experience more flexibility and ease with their finances. Are you ready to gain confidence and learn to manage your finances intentionally? Tune in and grab financial tips that will help you master the way you think about and manage your finances.
Hello and welcome back to another episode of Money File. So last week I talked a little bit about the paycheck to paycheck cycle, but I talked about it from a mindset problem. And today I’m going to talk to you about the paycheck to paycheck cycle from the income problem because it’s real that sometimes you are under earning and you actually need to make more money. But how do you know? Are you in the paycheck to paycheck cycle because you have a mindset issue or do you actually have an income problem? And I work with clients that we find out you actually have an income problem. Like we’ve actually created a budget, we’ve looked at the money that’s going out, we’ve looked at the money that’s coming in, and we can see that you are under earning, that you need to make more money in order to give yourself a little bit more breathing room to spend or give yourself more opportunities to save.
But when I am addressing the paycheck to paycheck cycle as an income problem, I am still talking about money in a way that I want my clients to feel supported. I do not want them to have shame about the money that they’re making. And so that’s just always my approach as a coach. If you listen to the podcast that I did with my client, Emily, I want to say it’s episode 192, we talk about how she actually got a job while she’s building her coaching business to support their family income because we found out that her family has an income problem and that they were underearning. So if we could create an extra $1500, $2,000 a month, it would give her and her family some more room. Because of how we approach the income problem it actually left her feeling empowered and not left her feeling shame about like, oh my goodness, like we’re overspending and we’re never going to get ahead.
We were able to disrupt that pattern that sometimes can come when we actually look at the fact that your budget just requires more money. And there are many reasons, or I’m going to identify, I should say three reasons today why I think that people enter into this income problem. I don’t ever think it’s intentional, but it’s uninvestigated and we want to make sure that we’re investigating what is the source of my income problem. So if you have an income problem that’s keeping you paycheck to paycheck, it is something that’s solvable. And when I’m working with clients, I want them to be in a position to earn more. I also want them to know why they’re earning more and I want them to have the power to earn more and not just feel like they’re stuck.
So if you are, maybe you’re listening to me right now and you’re like, oh my goodness, Keina, I might have an income problem. Like how will I know? It could be that maybe you feel like you’ve already cut back in some areas, but like the math still isn’t adding up. Or maybe every time you actually do have some space to get ahead, then you feel like something gets in the way of that. Like something breaks, a tooth needs to be fixed or a medical bill maybe wipes out your progress. So it might be that you have an income problem and not like a fundamental, I don’t know how I’m managing my money problem. And sometimes it could be a little bit of both. Sometimes they show up. But the three common reasons that I see for people having an income problem, is I see a cost of living mismatch.
People will get on consults with me, I’ve worked with clients and they’ll tell me like, Keina, I moved to California, I’m making more money than I’ve ever made before. And then they share with me that they’re making $70,000 a year. I know immediately, like $70,000 a year in California in San Francisco is not going to take you very far because your rent is higher, groceries are higher, gas is higher. So your cost of living has increased and your salary it increased as well. But your increase in salary is being eaten up by cost of living. So if you had that same $70,000 salary, but let’s say you were living in Oklahoma, it would be able to help you actually feel like you were getting ahead. You would have cheaper rent, your groceries would be lower than they would be in California.
The gas would be cheaper than it would be in California. So sometimes it’s just an oversight that you’ve looked at the overall job salary, but you didn’t actually make sure that the salary offer was going to also match the cost of living. So that is math that we want to make sure that we’re doing upfront so that when you move to a different location, you actually are able to take care of yourself and you’re not actually feeling like you’re taking a step back. I can give you an example, although I was aware of it, but this is what happened when I moved from St. Louis to DC. So I went from making like $30,000 a year to $50,000 a year, but I went from paying $600 in rent to $1,500 in rent.
And so how that impacted me is that I wasn’t able to save as much money because my cost of living also increased when I moved to DC, even though I was making $20,000 more. So if I hadn’t have been paying attention to that, I would’ve been like, oh my goodness, where’s all my money? But my money went to cost of living and I was very aware of that. But those are things that we do want to pay attention to when we’re making decisions about jobs that we’re taking and moves that you may be making that are cross country.
Reason number two that you may have an income problem is that maybe there’s been a lifestyle or a household changes. And so this might mean like your partner lost a job, maybe you had to take a pay cut because things were going on in your company and instead of firing you, they were like, Hey, we’re cutting everybody’s salary by 10% or 15%. Or maybe you even went from being a two income household to a one income household. That could have happened by choice. It could have happened because of divorce or separation. So you are now experiencing an income problem because those changes can often happen quickly and you’re not warned about them. So suddenly the income that you were relying on before, you don’t have it and you haven’t necessarily adjusted and made it work.
So my client, Emily, this is what happened to her family, is that her husband took a pay cut and they knew that he was taking a pay cut, but they at the time didn’t have a budget to actually go and look at the budget and make the necessary adjustments for what would need to shift as her husband was going from one salary to the next. And I think that happens with a lot of people because they just feel like they’ll be able to figure it out. And so they’re never able to figure it out because they may not have actually had a budget before and they’ve just been spending based off of the salary. So if you are encountering a life change, we definitely want to make sure that we’re looking at the numbers because those numbers are going to help you make decisions.
And then the third common reason that I see is that sometimes my clients, and even you might just simply be under-earning. And I see this happen definitely in the nonprofit space. I see it with educators, where people are just so thankful. And I say that with that tone because I literally have had people say to me, Keina, I’m just thankful to be making $100,000. And I, when I hear that, I know that that person has a money ceiling, they never thought that they would be making that much money. They feel really just like happy. They feel like they should be grateful. And so they have thoughts about earning more, but what they haven’t actually investigated is how much money do you actually need to manage the life that you have? Like if you have kids, what does that look like?
If you want to have kids, what does that look like? If you want to be able to invest in your retirement, what does that look like? If you want to be able to travel twice a year, what does that look like? So they have led with appreciation for their salary versus leading with how much do I need to make in order to have the life that I desire to have? So people that are under earning and have those money ceilings, they can put themselves into a corner where they’re not actually able to cover the bills that they need to pay and take care of the expenses they need to take because they have a money ceiling that doesn’t allow them to earn more. So I’ve seen this where I’ve talked to people that have literally, they have college degrees and they may take a job making $30,000 a year.
And I’m not saying that there’s anything wrong with that because I have made $30,000 a year, but they don’t have the connection to see how that job can’t be somewhere that they stay if they have other financial desires that they want to be able to create. And so when I’m working with clients that I clearly see that there’s an underearning, I just try to blow up everything that they know about money and help them see what does it look like for you to be able to earn more money. If we triple your salary and you go from 30 to $90,000, what kind of life does that help you create? If we quadruple your salary, what kind of life are you able to create? And how is that okay? And so we definitely dive into a lot more of the money mindset and letting them know that you don’t have to stay at that salary and that you simply do need to earn more.
And that is a requirement and that is something that you are deserving of. So with all three of these common reasons that I see your paycheck to paycheck being an income problem, it still goes back to the fact that you have to know your numbers, whether you’re under-earning, whether you have a cost of living mismatch or you have some type of lifestyle or household changes. We need a foundational place that allows us to understand what is it that I need to bring in? When you’re in this paycheck to paycheck cycle, you are literally managing your paycheck in this like 14 day cycle in hopes that it’s going to carry you to the next 14 days. And you don’t expand and think about like, where do I want to be 30 days from now? Where do I want to be 90 days from now? Where do I want to be 12 months from now?
And I see this where, if you’re in this paycheck to paycheck cycle and it’s income based, you are playing whack-a-mole. There’s the cruise deposit that came up. Oh my goodness, I got a parking ticket. So you have to pay those things or you’re trying to pay those things with the paycheck that you have, but then like you’re not able to pay that other bill that took place on the 15th day, but you haven’t been able to be paid again, and now you have a late fee. And so it just creates this constant cycle where you feel like you’re on a hamster bill. And I don’t want that for you. So if you are listening to me and you realize, oh my goodness, Keina, I think I have an income problem, I can see myself in one of these three common things that you’re talking about. I really want you to sit down and actually lay out your numbers. You can get my spending plan template if you go to Wealthovernow.com/spending-plan.
Also, if you look in the show notes, I want you to get my spending plan template and I want you to lay out your numbers. What bills do you have? Also, what things do you want to be able to pay for? And I want you to be clear on how much money do you need to make? What you bring in right now, does that actually cover your expenses or do you have a gap? If we can identify the gap, then that’s the only thing we need to solve for. You don’t have to scrap everything and start all over. Just like with my client, Emily, we understood that the gap was about $1,500 and we can even narrow that gap if we needed to and we could talk about like if we create an extra $1000, okay, here’s what happens if we create an extra $1,500, here’s what creates an extra $2,000.
But if we can identify the gap in between where you are now and what you actually need for where you want to be, then that’s the thing that we can actually solve and we can get you out of that paycheck to paycheck cycle. So all doesn’t have to be lost. And I want you to see that looking at your numbers is actually a place of empowerment. It is something that is going to propel you forward and not hold you back. You don’t have to have shame about it, but when we actually have the knowledge, then we can stop talking to ourselves about like, oh my goodness. Like, I shouldn’t have bought that ice cream cone. I shouldn’t have bought the candle, I shouldn’t have taken the trip, because it might not be any of those things. It could just be the sheer fact that you need to earn more.
And I would like for you to know, okay, I just actually need to earn more. So I can look for new jobs that are going to give me more money. If I know I need to make an extra $1,500, maybe I’m going to do that by getting a side hustle. Maybe I’m going to negotiate my current job and get a raise. Maybe I’m going to apply to new roles. But it can be something that’s empowering you instead of you feeling like, oh my goodness, I just need to be more disciplined, I need to work harder, I need to cut back because that stuff doesn’t actually make you feel good. It’s just making you feel defeated and like you aren’t able to manage your money well.
So if you are listening to this podcast episode and you’re like, Keina, this is me. I feel like it could be an income problem, I want you to know and tell yourself that knowing my numbers is going to change everything for me. That if I’m able to identify what the root cause of my financial stress is, then I’m going to actually be able to address it. And as always, if you want help with actually addressing the paycheck to paycheck cycle, maybe you’re like, Keina, I think I have an income and a mindset problem. Or Keina, I don’t actually have an income problem. I know I got a mindset problem. Wherever you’re finding me today, I want you to know that I can help you and you can go to my website, you can apply to work with me if you go to Wealthovernow.com, at the top, not at the back, but at the top, it says Apply to work with me, or you can go to my show notes. And until next week, have a great week and I look forward to talking to you next week.
Thank you so much for listening to Money Files. If you’re ready to take the next step to reach your financial goals, head to www.wealthovernow.com appointment and let’s get started.
