I have real trouble managing money, to the point where I'm almost living paycheck to paycheck. Although there are a number of reasons for this, I am aware of one major one, and I need advice on how to handle it.

I'm a big believer in treating others as I would like to be treated, and I've come to realise that I am constantly gifting others. It may be something simple as buying a friend lunch because they have less income than me, or are going through a hard time, or really for any reason.

As I am fortunate enough to have a lot of friends, I often find myself doing thing like this multiple times a week for different people. People don't ask for it, I'm always instigating it. I also tip a lot, buy cards and presents when people have events (which is often, there's been a lot of engagement, weddings and babies at the moment).

My go-to phrase is "I'll get it." And if someone buys me lunch or a drink or anything like that, I've instantly locked it in my memory so that I can buy for them in the future, thereby evening it out again.

I don't want to stop being generous. But I've realised that a huge chunk of my wages is going on others, and it's preventing me from building up savings. I'm essentially living a lifestyle I can't afford. But because I know a lot of people who are all deserving of generosity for multiple reasons, I don't know how to stop myself splashing money on them. I don't want to appear miserly or selfish, and with certain people I've created a routine where I'm paying, and made it appear like I have money to burn, so I don't want them to be concerned if I should suddenly stop. Any advice for how to cut back on splashing my money like this?

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    Welcome new user. It is fantastic that you recognize your problem. You have taken the first huge step, congratulations. It is a great thing to see. Congrats. – Fattie Nov 5 '18 at 3:23

If you have a regular income, a weekly or monthly paycheck which you can continue to receive, consider to create a personal budget plan. It can be as sophisticated as an online or offline budget program, or as simple as a notebook to track income and expenses. This notebook can also be a spreadsheet in the program of your choice, which can simplify things if paper is not your "thing."

I would hesitate to recommend a specific program for your budget, as there are many variations, but the notebook concept is very easy to implement. I have been using this method in one form or another since the mid-70s and it's quite effective.

Create a list of your expected expenses. If you pay utilities, split them out by type (electricity, water, heating fuel, etc) or cluster them in one block if you wish. If you purchase groceries for home-cooking, create a category for this. If you have a motor vehicle, another category for fuel consumed and possibly another for scheduled maintenance.

Examine past statements for checking and credit cards to ensure that you collect as many categories as possible. Once you have these categories, assign a chronological period to each one. For example, you likely pay electrical utilities on a monthly basis. This entry could be 12 for 12 times a year, or 1/12 for the reciprocal calculations.

If you are paid on a weekly basis, your calculations would be different from bi-weekly or monthly income receipts.

The objective of this exercise is to determine how your expected income matches your expected expenses. As a reference, I would assign US$250 per month for electricity. This is $3000 per year. For a weekly income, you would want to assign (in the notebook/spreadsheet) about $60 per week. The math generated is $57.69, but by rounding up, you have an additional buffer to your budget. For a monthly income, the math is slightly different, but the results are the same. That one is certainly easier, as your assignment becomes $250 per paycheck.

For every category, perform the appropriate math and time reference. Sum them up for the pay period. If your have a higher expense than you have income, you are in trouble from the start.

Based on your description, you aren't that deep in trouble, but the above math will give you a good idea of your standing. In my younger years, I was able to determine that my weekly income balanced on my expected expenses provided me with more than fifty dollars per week spending money. I had a line-item for "spending money" and it was wonderful to see it climb each week that I restrained my spending.

At the time, I did not have a savings program line item, nor did I allot for vehicle service such as oil changes and valve adjustments (way-old air-cooled VW!) and had to shell out some of my spending money for a replacement engine.

By estimating your expenses high, you will have buffers for each category that will appear each time you pay one. For example, the $250 for electricity would have a deduction for a $210 payment, leaving a $40 surplus. Ideally, you keep the surplus in that category, but it also serves as an emergency resource should it be necessary to replace an engine.

On paper or in a spreadsheet, you keep a new page for each pay period, transferring the previous period's balances and reference figures, allowing you to know at a glance your financial status. As a young adult, my piece of paper fit in my wallet and was re-written on a weekly basis. No computers back then!

Regarding the interpersonal aspect of not "splashing money about," consider to inform anyone who asks that you have established a budget program and are unable to be quite as lavish as before.

  1. Recognizing addiction is the first, and most incredible, step in working towards a better place. You clearly recognize your spending addiction and realize it could lead you to horror. You have achieved the "miracle" of taking the first step and it is easy from here.

  2. The second step is to seek help. Get yourself to a professional therapist or counsellor. There are many options cheap and expensive. Do it this very week or day.

  3. Loudly and openly PROCLAIM to everyone, that you're on a savings streak. Use language like this

"I'm on a savings streak through the end of the year, so no coffee shop for me."

"I've really blown it on the spending front this year, far too much money wasted. I've gotten rid of my data plan and Netflix so I can't download that movie!"

OPENLY and LOUDLY state all the time to everyone that you are on a savings streak, that you are cutting back on wasteful spending, and that you're saving hard at the moment.

  1. "I don't want to stop being generous...." Anyone you give money to is evil. Giving money instantly poisons relationships. Whatever these venues are were "you pay", simply don't go anyway. Never give a cent to anyone. When you are "generous" you just look the fool. You literally make a fool of yourself by being generous giving your precious money to others - they laugh at you. Simply stop doing this. It's the first thing your counsellor or therapist will tell you in (2). In time you can make small controlled donations to worthwhile charitable institutions, which will make you feel fantastic and be repaid over and over. Throwing money at anti-friends in bars is a disaster which you must stop.

Your money is precious, you have the correct attitude and I'm totally confident that a year from now you'll be in a different universe. Enjoy!

Head to a counsellor or therapist now. Openly and loudly tell everyone that you're doing that and that you're now on a savings streak. Enjoy!

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