Why More Money Is Not Always the Answer

“If only I had more money”

How many times have you told yourself this?

If only you had a little more, things would be straight. You’d pay down your debt, catch up on all your bills.

With more money your financial worries would fade into oblivion. We’ve all thought this at one time or another, but consider this:

“Mo’ Money, Mo’ Problems”

In 2001, David Lee Edwards entered a Clark’s Pump ‘n Shop and laid down $7 for lottery tickets. Later that evening he became the winner of a $27 million dollar lottery fortune. By all accounts he should have been in financial heaven. Yet high living and financial blunders found him five years later bankrupt and living in a storage unit.

Heidi Montag and Spencer Pratt rocketed to fame and wealth as a result of their roles in the reality TV hit The Hills. The series stars later married, becoming one of Hollywood’s power couples. Yet by 2010 the couple had blown through their $10 million reality TV fortune. They now find themselves so broke that they live in a home owned by Spencer Pratt’s parents.

Bad Habits Now, Become Bad Habits Later

But it’s not just lottery winners and reality TV stars that run into trouble when more money appears. Doctors and lawyers frequently find themselves just as broke as the rest of us.

And many of us are still in debt after receiving a pay raise, finding a better paying job, or coming into a huge IRS tax refund.

Bad habits and poor money management skills don’t suddenly disappear when more money enters the picture. They simply get amplified, leaving us no better off.

How Do We Keep From Falling Into the More Money Trap?

Now let’s be crystal clear. Increasing income is vital to wealth building, but only if we learn how to manage the money we already have.

More money can become a blessing instead of a curse.

Simply set your bad money habits straight before you come into more cash.

First and foremost, understand what you spend your money on. Truth be told, most of us have no idea where our money goes. Track your spending to find the money pits, because these money drains only get larger as your income grows.

Second and more importantly, take a hard long look at why you spend money. Psychological forces drive our money habits, and these same forces turn into demons as more money comes in the door.

Do you spend to feel better about yourself? Are you looking to impress others? If so, that late model Honda Accord morphs into the late model Mercedes money pit when more cash comes in.

Does shopping provide a form of “retail therapy” for bad days at the office or drawn out fights with the spouse? If so, after the paycheck starts expanding, those $100 shopping trips become $400 shopping nightmares.

Do you have a “sense of entitlement?” Heck, you’ve worked hard and deserve every luxury you purchase. If that’s driving your spending then you’ll likely experience super-sized bills when your income improves.

Yes, it takes an honest assessment to identify our less than pretty spending motivations. But once we uncover the warts and blemishes, we’re in a better position to master our money.

And when we do become blessed with more money, we’ll be equipped to make the most of it.