Key Takeaways
  • If your living expenses exceed your take-home pay, then it may be time to start strategizing on the way to increase your income.
  • If you are budgeting and still find yourself having debt at the end of the month, look at your expenses to see if there is anything you can cancel to lower your costs.
  • Avoid using credit cards unless you have the money in your bank account to pay it off.
Are you ready to make some real money moves?

Most people who run out of money each month automatically think their spending habits are the problem. But many people are spending as little as possible and still struggle to make ends meet.

A High Cost of Living

Your high living expenses may be the culprit, or maybe your income is just too low. So whether you are living in an expensive city such as New York City, San Francisco, or Los Angeles and your monthly rent is just too high, or your paycheck just isn't cutting it, we're here to help. 

Recommended Read: Top 10 Cities Where the Average Salary Doesn't Cover Living Expenses

It is important to understand your standard of living. Your standard of living depends on where you live and how much you earn. It also measures how much you are able to afford, given your location and income.

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Are you living above your means or within your means? Is it expensive to live where you are currently living? What is your cost of living index? Your cost of living index, also known as the consumer price index, measures the prices of goods and services around you compared to a different location.

For example, if you are making $50,000 per year, your standard of living may be high in Boone, Iowa due to lower prices for goods and services. However, in San Francisco, California, one of the highest cost of living cities in the United States, you'll find yourself barely making ends meet. Therefore, San Francisco would rank a lot higher on the cost of living index than Boones.

Once you’ve answered all these questions, you can decide if your budget has room for improvement or if you need to find a way to increase your income. 

Many people jump to looking at their expenses before understanding whether their income can handle their basic needs. Examining opportunities to increase your income, including picking up a side hustle, and cutting your costs to the bare necessities, will help to provide a significant chance of improving your finances.

Earning Extra Income

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If your expenses exceed your income, the first potential solution is to start working another job. This could be a new full-time position, an additional part-time job, starting a side hustle, or doing freelance work.  

New Full-time Job

According to Zippia, the average salary increase when changing jobs is 14.1%, while wage growth is only 5.8%. Those between the ages of 25-34 receive the highest pay increase when switching jobs at a high rise of 9.8%. Overall, it is important to keep your resume up to date in the event that you decide to begin searching for a new full-time job.

Part-time Job

Another solution to gain more money is to start looking for part-time jobs. When applying for jobs, it is important to make sure your resume is updated and in the proper format requested by the employer. This will increase your chances of getting called for interviews, thus speeding up the timeline of potentially earning more money.

Side Hustle

Side hustles are usually the best ways to make money, as they typically allow you to pursue a career in your hobbies. However, some potential ideas for a side hustle such as starting your own business or YouTube channel may take time before you see any profit. 

There are many other side hustles that are cost-effective. For example, if you work a typical 9-5 Monday through Friday, you can use your car to make money through DoorDash or Lyft on the weekends.

Additionally, you can rent out your car using an app called Turo. This car rental app allows you to take pictures of your vehicle, and users can rent it if they wish. This side hustle is beneficial if you want to stay home on the weekends and create passive income

Freelance Work

Lastly, you can use a website like Fiverr to complete contracted work for people online. This side hustle will allow you to do cost-effective work, increasing your monthly income without increasing your monthly expenses. 

Cut Your Expenses; Create a Budget

Creating a budget is the second way to ensure your living expenses are not more than your monthly income. When it comes to creating a budget, there should be two categories of expenses: wants and needs. 


Wants are a type of expense that is not needed for basic survival. Instead, these expenses are ones that make us enjoy our lives. These expenses include eating out, purchasing subscriptions such as Netflix and Spotify, and buying expensive clothes. Although it is important to spend money on wants that make you enjoy your life, if your monthly expenses are too high, you may need to cut out some or all of your wants to prevent debt. 


Needs are expenses that are essential to surviving. Unfortunately, these expenses cannot be removed; however, they can be lowered. Some examples include housing, transportation, utilities, and food. 

One way that you could lower your expenses is by restructuring your water rate. There are many different rates available, and you should choose one that fits your water usage to ensure the least amount of money is spent paying your bill each month. 

Furthermore, another way of lowering your expenses is by decreasing the amount of money spent on food. For example, if you were to buy your food in bulk from retail wholesalers such as Costco, you would notice that there would be less money spent on food at the end of the month.

Now that we know the different types of expenses and how to cut back on both, let’s talk about how implementing a budget while using these tactics can help you achieve your financial goals. 

Keep Track of Revenue and Expenses

When purchasing an item, keep the receipt and use it to make a spreadsheet outlining where your money is being spent. This will help you become aware of your spending habits and let you know where you’re spending unnecessary money. After keeping track of your monthly expenses, you can then compare them to your monthly income and see if you made or lost money at the end of the month.

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Make Short-Term and Long-Term Goals

Having short-term goals help you stay on track to achieve your long-term goals. It is challenging to accomplish a plan that may take a couple of months to achieve if there are no mini-goals along the way to make sure you are on the right track. 

For example, a short-term goal could be to stop eating out for one week to see its effect on your net income. You would notice that you saved money and now have more money to pay your bills. These mini-goals could also provide a sense of satisfaction and potentially boost your confidence regarding your personal finance skills.

Be Careful When Using Credit Cards

Credit cards are great for building credit when you are in need of a large loan. Unfortunately, when misused, it could result in lasting effects on your credit, making it difficult to secure a loan from a bank.

All in all, having expenses that are higher than your income is a tough situation. However, by implementing the tactics mentioned above, it could be easier to make a transition into a life of financial security and stability.

What are some other ways that you could lower expenses or increase your income? Let us know in the comments below. 

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