Why was it easier to budget when you made less money?
When you were barely making enough to get by, you were really good at budget – but you also created an invisible scarcity mindset around your finances. Food, water, and shelter were the most important things to you. Once you start earning more, that feeling of scarcity doesn’t just go away. Everyone has deep-seated emotions about money, and for many, spending fills a void and so the budgeting conversation has to shift when you go from making $30,000 to $100,000 to $200,000.
In today’s episode, I discuss the complexities of high-income budgeting. From understanding different types of spending needs to learning what to do with extra money after the bills are paid, I encourage you to take a different approach to managing your finances so you can let go of the scarcity mentality and shame, and start aligning your budget with your goals and have more money for what you want.
Tune in now to explore why it is more challenging to budget as you make more money and learn:
- [01:30] Why budgeting was easier when you made less money.
- [04:42] Why more money = more comfort
- [07:36] Basic needs vs. emotional needs
- [11:54] What to do with “extra” money
- [16:30] Why your goals should anchor your budget
Tune into this episode of Money Files to learn why it is more challenging to budget when you make more money and how to overcome a scarcity mindset.
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 Why Was Budgeting Easier When You Made Less Money?, check out my episode on, Reshaping How you Think About and Plan For Extra Income!
Transcript for “Why Was Budgeting Easier When You Made Less Money?”
Intro: Hi and welcome to Money Files. I’m Keina Newell from Wealth Over Now. I work every day 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.
Keina: Hello and welcome back to another episode of Money Files. Can you guys believe what month we are already in, in 2024? It’s just always crazy to me how fast time passes and yeah, we’re here. We’re like, dang, alright. We are going downhill and we will soon be in 2025, which is just crazy to me. I want to tell you guys something upfront. I have very limited notes for my podcast today. So I am just talking to you off the top of my head because something has been coming up that I want to articulate for you because it’s probably something that you’ve experienced or you’re currently experiencing and I think I’ve also experienced it. And I want to let you know that you’re not alone, that you’re not broken, that this is an opportunity like I am asking you to rise to the occasion to do something different for yourself and to let go of the shame that you might be feeling when it comes to your finances.
So one of the things that I’ve been hearing a lot lately is I used to be able to budget when I didn’t make that much money or I used to be able to budget when I made less money and when I have really stopped to think about that, which if you guys know my story, I was making like $30,000 a year as a teacher. And so I understand what it means to make less and I understand what it means to be a six figure earner as well. But I was thinking about what’s true when you’re not making a lot of money or when you’re just making ends meet. And I have clients that have come from jobs where they’ve made $2,500 a month and they were like, I could make ends meet when I was making $2,500 a month and I don’t understand why I can’t do it right now.
And that can be really frustrating to get to a point where you’re making more money than you’ve ever made before and you’re trying to figure out how is it that I have more but I feel like I have less or I don’t have money in the bank to actually feel like I’m making enough. And through reflection, one of the things that I’ve been thinking about, especially as a financial coach is that when you are just making enough to get by, you know basically your life is on a line. You know that you want to make sure that you keep food, water, and shelter. Like those are the most important things to you. Even when you think about like Maslow’s hierarchy of needs, you want to make sure that those needs are met. And so you were really good at like pinching pennies and cutting coupons and making sure that you took your lunch to work every single day.
You were able to live and breathe that lifestyle for the time that you needed to breathe it until you started making more. But what I also want to acknowledge that maybe you haven’t acknowledged for yourself is that lifestyle, it bred scarcity. You did what you needed to do to get by because it’s how much money you had and you wanted to make sure that your basic needs were met. If you guys know like Maslow’s hierarchy of needs, which I just remember this from psychology class, so if any of you listening are a psychologist, please know that I am totally underqualified to probably be talking about this. But I just remember the graphic and when I think about that pyramid, I think about that bottom base, that foundational piece.
And it’s like you just want to make sure that you have food, water, and shelter. Those are your basic needs that you are attempting to fill. And as I think about what happens as you make more money, you also create more comfort. You’re able to have more breathing room, even if it’s only from the technical sense of being able to see that you have a bigger paycheck or receiving the bigger offer letter when you apply for the job. And so that gives you instant relief. Like when I think about me going from $30,000 a year moving to DC and making $55,000 a year somewhere around there and even when I went to like making $80,000 a year, each one of those jumps gave me a little bit more of a like, oh, you can like breathe, but when you’ve bred the scarcity in making sure that your bills are paid, that scarcity can follow you.
And really also it creates a scarcity in thinking. So stick with me here. When I think about the scarcity and thinking that it breeds is that you learned when you made less money that you needed to make sure your basic needs were taken care of. And you have taken that understanding, that key foundational thing that you need to make sure that your food, water, and shelter is taken care of and you’ve carried that over to when you started to make more money. Your thinking also stayed in that box that you just need to take care of food, water, and shelter. That’s why you’re in a position right now where you’re like, but my bills are paid, like every once in a while I might worry about something or I might be worried about an overdraft, but at the most basic level, you feel like your bills are paid and so you are doing the thing that you taught yourself to do that other people taught you to do, which is like take care of your basic needs.
But the budgeting conversation shifts when you are making $30,000 a year versus $100,000 a year versus $300,000 a year. And I think that’s what we don’t talk enough about. And so your brain hasn’t evolved and you don’t have adaptations to take with you to $100,000 a year or to even $300,000 a year because you are focused on meeting your basic needs. And that’s not a bad thing. I want you to meet your basic needs. But what happens is that there are these other, so you have your basic needs but then you have these emotional needs that also come into play. And it could be like depending on how you got to where you are financially, especially when you’re coming from not making a lot of money, you may have told yourself, when I start making a hundred thousand dollars, I’m going to dress like this because I deserve it.
You could have come from a household where maybe there was literal food scarcity. And so you are even taking it up a notch when you decided that you make six figures, that you’re going to make sure that you always have a stocked pantry and that you always, like your kids never go without. You could have never been able to take trips. And so you really have this yolo lifestyle and you want to be able to not miss out on anything. You know that you only have one life and you want to be able to have experiences or I think the other mindset shift that comes into play here is that I make too much money to budget. And I think that thinking comes from the fact that you think that budgeting is really just about meeting your basic needs and it’s about so much more than that.
And also recognizing that you spending money isn’t going to help you heal in the way that you think it’s going to help you heal. And I’m specifically talking about the emotional parts of money because people and I work with a lot of different clients is that we’re using money to fill voids in our life. And even just a simple thing, like I’m thinking about when I can get in a place where I haven’t had a lot of intentional time to pour into myself and the ways that I think about pouring into myself, it’s like, okay, am I reading my Bible? Am I talking and connecting with friends, am I working out? Things that pour into my overall mental health when I am not in that state, I can find myself spending money in ways that are not advantageous for myself. Like I can find myself going on a shopping spree on Amazon or even like, I know you guys probably have heard me talk about this a lot, it’s like even when I can find myself on Instagram and I’m like, oh, I’m all in a rabbit hole on somebody’s like it to know it page and I’m thinking I need all these outfits.
If I’m able to stop and pause and catch myself in those moments, I can honestly say that I at some level I’m depleted and I haven’t been taken care of myself and it will show up in my bank account, it will show up in my spending. So I know that about myself from tracking my own spending. But I talk about it with clients where whether I still work with business owners and business owners could be using money to solve problems in their business or they’re even using money and not just business owners, but W2 employees are using money in their life to solve problems.
They’re like, oh well if I can get a massage every single week then like everything will be good. I won’t be annoyed with my husband or I’ll just feel like I’ve arrived and I’ve made it. But these emotional pieces, like I said, they come up after your basic needs are met and honestly you need to find some other outlet than just spending money. I’m not villainizing spending money, but I am naming for you that what oftentimes I see happen as you move from the, I used to be really good at managing my money to the now I have more than I’ve ever made, but I’m wondering where my money is, is that your money is creeping out in emotional ways to solve problems and you haven’t been taught or even shown how to think about money beyond just paying your bills.
I actually had a really good conversation with one of my friends and we were talking about this and she was saying, I feel like when I paid off debt in the past that no one ever told me to then go and save money, like I should be putting money into my retirement. I just didn’t know that was the next step. Like she knew to pay her bills, she knew to pay off the debt, but she didn’t know that was the next step. And some of you may be thinking like, well how do you not know that’s a next step? Well if you look at what influences you and you actually take the time, especially if you’ve developed awareness around your money and you take the time to look at the influences around you, think about what they’re doing with their money, you’re probably trying to match what you perceive these other people to be doing with their money.
Also people generally when you think about your friend groups or your peer groups, they’re not necessarily always talking about saving money. You may see the things that people have. You see that they have a nice car, you see that they have a nice home, they have a nice house, they’re dressed really nicely, they always have their hair done, their makeup is always done, their nails are always done, like those are the things that you may see and for you they can become status markers. And so you’re thinking, okay, well after my bills are paid, this is the next goal I have for myself. And you don’t necessarily say that explicitly, but when your basic needs were met, which is to have all of your bills paid and you got to a place where there was extra, you haven’t been taught what to do with the extra.
That’s the only thing that happened is that you weren’t taught about what to do with the extra. And it’s why making more money isn’t actually solving the problem. Because you will always find a need to feel, you will always be looking for something else because you haven’t actually addressed with yourself what you want money to do in your life. And when you understand for yourself like, okay, what do I actually want money to do in my life? It’s going to shift how you think about money. It’s going to shift you thinking about a budget being something that’s restrictive and telling you not to spend to where you can see that a budget is going to tell you how to spend to build the wealth that you desire to create. You can use a budget to think about how much money do I actually want to make so I can continue to build the life that I want to make.
You could potentially be underearning in comparison to the life that you desire to create for yourself. I would argue that you don’t know that only in the sense that you’re dissatisfied with what you have saved, that you’re like, yeah, of course I don’t make enough money, Keina I could have told you that. I see it time and time again with my clients where I’m like, wow, you have a lot of money to work with. Especially if we make these like little small tweaks and changes in six months from now, you could have a five figure savings account in 12 months from now you could have $10,000 of debt paid off, like just simply by making small tweaks with how you’re thinking about your money, that’s the skill that you’re missing is being able to actually know what to do after your basic needs are met and knowing what to do with the extra, what do you do after the list of bills are paid?
I mean that’s a perfect example. It’s why you keep making that list of bills because it’s the thing that helps you feel secure when you were making a lot less money, that list of bills, you knew where every single dime went when you were making a lot less money. And I would argue that my clients don’t need to know where every single penny goes, like that can sound really draining. But I have them anchoring in what are your bigger goals around how you want to live financially? How do you want to feel when you open up your bank accounts? How do you want to feel at the dinner table when you want to pay for the check? And so with the way that I’m teaching my clients how to budget and really leave behind that thinking that they had when they were making just enough to pay their bills, to moving them into a space where they are looking at their money as a vehicle and a tool to build wealth for themselves, those are two different people.
So you’re not going to be able to do what you want to do with your money right now if you still have the mentality of that person that is just making it. And that mentality doesn’t mean that you are pinching every single penny, but if you don’t have like the freedom to be able to check your credit card, if you don’t have the freedom to be able to look at your bank account, if you don’t have the freedom of knowing that if your car broke down tomorrow that you could afford to pay to get your card fixed, then I would argue that you have the scarcity mindset that comes from the budgeting mindset of managing your money just to pay your bills when you just have enough. Because right now you’re doing everything in your power not to be on a budget and that’s actually creating restriction in your life because you don’t know what to do with the money after you pay your bills because you’ve never been in this position before and you didn’t have a plan for when you got in the position to do more than just pay your bills.
So like I said, I felt like I needed to get on and just dump my thoughts and share them with you because I don’t want you to feel like you’re out there alone, especially if you’ve been in the thought pattern of like, why can’t I figure this out? Like I have 18 degrees, I make $200,000 a year. This should not be this hard. When I made $35,000, I had money in the bank and I was able to be controlled like boo boo you’ve grown up since you were 22 and you were just making that amount of money. That’s one. And you have different goals than you had when you were 22. What you haven’t learned is how to adjust as you age and as you enter into new financial seasons. And that’s the thing that I help clients do is being able to have that flexibility as they move from one financial season to the next.
So they don’t have to worry about where their money is going and they’re going to actually feel like, oh, I have something to show for the amount of money that I’ve made. I don’t want you to be a $200,000 owner that you’re like, how in the heck do I have $60, $70,000 in debt? Like how did I get here? And if you are that person, I can help you. We can have the most fun together because we can wipe that out, especially when you actually are able to see where your money is going to be able to see, okay, like the small simple shifts that I can make in my habits to actually save money to actually pay down the debt. Because here’s the other thing is you may be thinking like, well Keina, I’m going to pay down debt before I work with you, which you can do that.
But I have clients that come to me and they have paid down the debt, but they’re like, girl, I’m scared to actually spend the money I saved or I’m scared that I’m going to get back into debt. So it’s best to come to me when you’re messy and you are as you are just right now, like you don’t need to fix anything, you ain’t got to do your hair, none of that. Like the only thing that you have to do is just decide that you’re tired of trying to figure this out on your own. Because in five months we’re going to be able to do what you couldn’t do in the last five years. We’re going to be able to build your savings, we’re going to be able to pay down your debt, we’re going to be able to get you more money that you actually are able to spend.
We’re going to get you better sleep at night because you’re not going to be worried about money. And we are going to make sure that you’re doing more than just meeting your basic needs. So once again, thank you so much for tuning into this episode and I look forward to talking with you next week. If you are like, girl, I need to apply to work with you, go to the link in my show notes and you can apply there or you can go to wealthovernow.com/appointment and you can book a call with me. But I would love to talk to you about what your financial challenges are, what are your goals and help you create a step-by-step path to reach exactly where you desire to be. Alright, have a good week.
Outro: 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.
