Nearly half of Americans making $100,000 or more a year struggle to pay their bills. The same is true of 32 percent of individuals earning at least $150,000 a year. While it’s true that, six figures in New York doesn’t get that far compared to lower-cost regions, it still exceeds what many people make. Those with higher incomes can often do a better job managing their finances but they may not know where to start. If you’re in this situation, asking yourself the following questions can make a big difference in your life.

Where is your money going?

The first step in addressing your financial problems is determining exactly how much income you have and where you are spending it. Gather receipts and examine your credit card, bank, and payment app statements. Many people are surprised at how much money they spend on things like going out to eat, entertainment, shopping, streaming services, gym membership, and other expenses.

What expenses can you cut?

Once you know where you are spending money, you need to consider which expenses are necessary vs discretionary. Rent/mortgage, insurance, utilities, basic food and clothing, transportation, healthcare, and other costs are essential. However, you still may be able to save money on these. Downsizing, weatherizing your home, comparing insurance carriers, taking advantage of sales, and other tactics can make a big difference when you add them all up.

“Lifestyle creep” tends to be a problem here too. Higher-income people often start to gravitate toward spending more money on a home, car, food, clothes, etc. How much of this is truly essential?

Discretionary expenses require an even closer look. Cutting all the fun items out of your budget and living an austere life is not the goal. You should set aside funds monthly to use for things you enjoy or want but it’s a matter of how much you spend on these things. That depends on your financial situation and your goals and priorities. Seeing actual numbers helps you make those decisions.

Do you have significant debt?

The largest source of debt for people is credit cards. Those with higher incomes are more likely to rely on credit cards and accumulate debt than those with lower incomes. Because of exorbitant interest rates, developing a plan to address what you owe is key.

If you find ways to cut expenses, how much of the savings can go toward paying down debt? Can you move debt to a low-interest credit card? A daily money manager can help you develop a plan for reducing debt. In some cases, it may also be useful to consult a debt counselor to negotiate with companies to settle for less than you owe.

Are you sacrificing too much for your children?

It’s natural to want to help your children but too many people are spending more than they can afford. You need to put aside money for your retirement before paying for college or giving them money to pay for a wedding or a new house. Your children can get a loan easier than you can and will have more time to pay it off unlike you.

Do you have a budget?

When you have your financials together, creating a budget is essential to help you figure out how much you can afford to spend based on your needs, wants, and goals. For example, are you trying to pay off debt, save for your kid’s college or your retirement, create an emergency fund, or buy a house? Your budget will take this all into account.

Tracking how you are doing compared to your budget also enables you to identify potential problems before they become too bad.

Have you consulted your accountant and financial planner?

There may be opportunities for you to save on taxes, invest more effectively, or protect your future with insurance. Financial experts can look at your situation and provide appropriate advice

Are you committed to sticking with the changes you made?

Unfortunately, many people start strong and then stop monitoring their expenses, or they make too many exceptions to their spending rules, or just give up. Our spending habits are learned (sometimes in childhood) and we default to them until we understand why we are making certain choices and how it is impacting our lives.

A daily money manager can help you develop a plan that works for you, teach you how to maintain it, and monitor your day-to-day finances if you need extra assistance.

If you are struggling to pay bills, contact me for a free consultation.