You don’t need a raise to stop being broke. You need to know where your money is going.
That sounds simple, but most people genuinely have no idea. They earn a decent income, make their payments, and still end up with nothing left at the end of the month. The problem usually isn’t income. It’s untracked spending.
A real-world budget example
A few years ago, a friend of mine was working in the music industry in Los Angeles. Good job, steady income, fun lifestyle. But he came to me frustrated because he was going deeper into debt every month.
After taking a look at his numbers, we figured out he had about $1,400 left each month after rent and utilities. Here’s how he was spending it:
- Gas: $50/week = $200/month
- Breakfast (fast food most mornings): $5/ea = $100/month
- Lunch (eating out daily): $8/ea = $224/month
- Weekday dinner (takeout): $10/ea = $200/month
- Weekend dinner (restaurants): $15/ea = $120/month
- Cable and internet: $80/month
- Cell phone: $80/month
- Coffee: $50/month
- Weekday alcohol (beer at home): $80/month
- Going out Thursday through Saturday (drinks, rounds for friends): $600/month
Setting aside rent and a few other things, he was overspending by $334 every single month.
When I walked him through the numbers, his response was classic: “Yeah, I should probably stop buying those breakfast burritos.”
I laughed, but he was serious. His social life was clearly much more important than breakfast burritos. Even though eating out for breakfast was costing him $100/mo and alcohol was $680.
The lesson here
We almost always underestimate how much we’re spending in our biggest categories. The small daily purchases feel like the problem because they’re visible. The large habitual expenses become invisible because they’re routine.
My friend wasn’t doing anything unusual by LA standards. He was just spending more than he made, in a way that felt completely normal month to month.
The fix wasn’t a raise. He could have gotten a $5,000 a year raise and still ended the year deeper in debt. The fix was tracking his spending and making conscious choices about what mattered to him.
How to do your own budget
Go through each of these categories and estimate what you spend in an average month. Be honest. Guess high if anything.
- Rent or mortgage
- Utilities (electric, gas, water)
- Groceries
- Restaurants and takeout
- Coffee
- Alcohol
- Gas
- Car payment
- Car insurance
- Phone
- Internet and streaming
- Clothing
- Personal care (haircuts, toiletries)
- Entertainment and hobbies
- Gym or fitness
- Subscriptions
- Anything else you spend money on regularly
Add it up. Compare it to your take-home pay. If the total is higher than your income, you’ve found your problem.
Spend less than you make
This is the whole secret to wealth. Not investment strategies, not side hustles, not crypto. Just spending less than you earn, consistently, over time.
Once you have money left over every month, you put it to work: emergency fund first, then debt payoff, then investing. But none of that is possible if your spending is higher than your income.
Look at your numbers. Find the real leak, not the breakfast burritos.