If you’re working hard at your job and being reasonable with your spending, you may still find it’s hard to make ends meet and hit your savings goals.
One question to ask yourself is whether you’re making enough money. Can you really afford to keep plugging along at your current salary? Here, you’ll learn some helpful ways to tell if you should be making more money and, if you should, how to get there.
10 Red Flags That Signal That Your Income Is Too Low
Do you frequently ask yourself whether you should be making more money — or feel as if you’re not making money work for you? If so, it’s possible you aren’t making enough or managing it optimally. Here are some signs that you need to be earning more in order to thrive financially.
1. Not Being Able to Pay Your Bills
As long as you aren’t renting a luxurious penthouse or leasing a fancy car you truly can’t afford, you should be making enough to pay your basic bills. Yes, it can be difficult to save money with a low income. But if you’re working full-time to cover things like rent, car payment, health care, and utilities, without any shot at saving for your future, that’s a sign you need to earn more money.
2. Using Your Credit Card for All Expenses
There’s nothing wrong with using a credit card to pay for expenses if you can afford to pay your credit card bill off in full when your monthly statement arrives. That’s a great way to earn cash back and credit card rewards.
A problem arises if you need to use a credit card in order to cover expenses because you don’t earn enough to buy essentials, like food and personal care items.
3. Not Being Able to Have an Emergency Fund
Having an emergency fund can help you be prepared for the unexpected, such as a major medical or dental bill or getting laid off. Ideally, you would have three to six months’ worth of basic living expenses covered by the money in an emergency fund. If you’re living paycheck to paycheck, however, and can’t even start building a fund with perhaps $25 per pay period, you likely need to earn more.
4. Paying Only the Minimum on Debts
As mentioned, turning to a credit card to cover essential purchases can be a sign of not making enough money. This can lead to high-interest credit card debt, which can be hard to pay down without making extra payments.
If you can’t afford to make extra payments on a credit card or other form of debt, increasing your income can make it possible to minimize how much you owe and those interest payments.
5. Not Being Able to Cut Anything Else
If you take a cold, hard look at your budget and realize you can’t cut any more expenses because you are only paying for essentials, then that’s a sign you need an income increase. Living on such a tight budget isn’t sustainable long-term, and there should ideally be room in a budget for some small fun purchases, too.
Recommended: 7 Different Types of Budgeting Methods
6. Not Being Able to Build Savings
Even if you are motivated to save money, if you’re not able to save for retirement or other long-term goals, it could be a sign that you’re not earning enough.
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7. Making the Same Wage Despite Company Growing
If your company is growing and flourishing, in part because of contributions made by you and other workers, you may deserve to earn more than you’re currently making.
8. Not Being Able to Reach Financial Goals
If you are earning enough money and sticking to a budget, then in theory you should be able to make slow but steady progress toward your financial goals. Failing to do so could mean you’re coming up short on salary.
9. Consistently Struggling to Make Ends Meet at the Beginning of the Month
Many people start to run out of spending money at the end of the month. That’s because they’ve paid all their bills and are waiting for the next cash infusion from their paycheck. If, however, you are consistently struggling to make ends meet at the beginning of the month, when payday has arrived, this indicates you aren’t making enough to pay your essential bills.
10. Worrying About Money Consistently
Everyone deserves a good night’s rest, not lying awake worrying about how to pay the bills. If you are consistently worrying about money and trying to figure out how to tackle financial anxiety and stress, that can be a major sign you aren’t earning enough money.
Tips for Negotiating a Higher Wage With Your Employer
If you feel you need and merit more money, it can be wise to have a conversation about a raise. These tips can help.
• Research salary data. Before an employee asks for a raise, they need to get an idea of how much workers in similar roles at other companies earn. Luckily, there are tons of online resources where workers share their job titles and salaries. It can also help to look at the salaries listed on current job postings similar to your position.
• Make a list of accomplishments. Workers should approach the boss with the facts about how good they are at their jobs and why they deserve to earn more. Make a list that specifies some of your major contributions and use that to back up your ask for higher pay.
• Have an alternate ask. Sometimes a company truly can’t afford to give a good employee a raise. In that case, is there something they can do to make your life easier? Can they make it possible to work remotely and save on commuting? Can they give you more PTO or a flexible schedule to help cut down on daycare costs?
Recommended: Good Paying Jobs Without a College Degree
The Takeaway
If you are working hard and watching your spending but are living paycheck to paycheck and are unable to save, you may not be earning enough money. Asking for a raise, with documentation of why you are worth it, is one path forward. Or you might decide to change jobs or career paths or even move somewhere more affordable.
It can also be a smart move to ensure the funds already in your bank account are working hard for you.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
FAQ
How do I know if I’m being underpaid?
Do salary research online to see what workers in similar roles and industries are earning. You can likely find this information everywhere from the Bureau of Labor Statistics to job search sites.
How much money must I earn to feel it is enough?
Having “enough” money depends on your unique perspective. That being said, you need to be able to comfortably pay your bills and cover essential expenses without having to worry that you’re running out of money each month. Also, being able to save for long-term goals (such as a down payment on a house or retirement) is also important.
How can I save if I don’t make enough money?
It can be hard to save money if you don’t earn much more income than you require to get by. Consumers can always scrutinize their budget to see where they can cut back spending in order to save more. Too many streaming services? Or pricey lunches? Try starting there.
About the author
Jacqueline DeMarco
Jacqueline DeMarco is a freelance writer who specializes in financial topics. Her first job out of college was in the financial industry, and it was there she gained a passion for helping others understand tricky financial topics. Read full bio.
Photo credit: iStock/nensuria
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