The Better Budgeting Podcast

Making Over $100k a Year and You're Not Budgeting?

• Danielle Reese • Season 3 • Episode 4

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Why do some households earning over $100,000 still face financial struggles? Let's unpack this pressing issue in today's episode of the Better Budgeting Podcast. Starting with a heartfelt thank you to our supportive listeners, including a touching message from Paso Robles, California, we share a poignant personal story of a listener in financial turmoil. We offer practical advice on how small, positive financial and marital decisions can lead to major changes. You'll hear firsthand how even those with high incomes can fall into the traps of overconfidence and financial mismanagement without a solid budgeting strategy. I recount my own experiences from 2016 to illustrate how income increases don't necessarily equate to financial stability.

Moving beyond the basics, we explore the high-income mindset and how lifestyle inflation can wreak havoc on your financial habits. Discover how increased earnings often lead to spontaneous spending and how the company you keep can influence your financial decisions. Through an inspiring case study of a high-earning couple, we'll show you how adopting a budgeting mindset transformed their financial landscape, leading to significant savings and reduced stress. Finally, we'll discuss the importance of financial accountability and the need for consistent follow-through on financial plans. This episode is a comprehensive guide for mastering your finances, no matter your income level, emphasizing that budgeting isn't just a necessity for those struggling financially—it's a path to financial independence and peace of mind.

Danielle is a money coach helping women and couples who have been trying to figure out their finances FINALLY create a clear plan so they don’t have to worry about waiting to refill their bank account the next payday.

She is the founder of The Financial Freedom Society on Facebook and her signature money coaching program, The Better Budgeting Playbook. You can sign up for her newsletter by clicking here.

Take the first step towards financial freedom and sign up for a complimentary assessment call with me, Danielle Reese.


Grab your copy of "Let's Talk Groceries" Your Guide to Reducing Your Grocery Bill" This is an ebook with over 30 pages of tips, tricks, and guidance to help you save hundreds on your grocery bill!

Sign up for the early release of The Better Budgeting Blueprint for $99 with a $50 refund once completed. The release is scheduled for April 1st 2025.

You can connect with her on Facebook or Instagram.

Speaker 1:

Hello and welcome to the Better Budgeting Podcast. I'm your host, danielle Reese. I'm a money coach and the founder of the Better Budgeting Playbook, and this is my one-on-one coaching program for women and couples who have been trying to figure out their finances, finally create a clear plan so they don't have to worry about waiting on payday anymore. I became a money coach in 2020 after paying off over $60,000 in debt, rekindling my marriage, becoming financially free and wanting others to experience the same. If you'd like to work with me, you can check out the link in the show notes there. Also, we have the Financial Freedom Society on Facebook. It's a free Facebook community focusing on debt payoff, saving strategies, budgeting and money mindset. You can find the link to that community in the show notes as well. Welcome back, friends. I'm so happy to have you here.

Speaker 1:

In case you didn't know, you can send me what we call fan mail, and in the beginning of all the episode descriptions I believe it's on any platform that you're using there is a send us a text message button. You just click that and it sends us a text message and you can leave me fan mail. I received one over the weekend from Paso Robles, california, and I wanted to share it with you. And it says I have so much respect for Danielle. She's so real and I feel so much relief when I listen to her podcast, so I listen to them all day. I'm living in fear, panic and guilt for my financial situations. It's affecting my family and parenting and relationship with my kids. My husband and I have been in financial turmoil for years and I can no longer go on with it. It's affecting my health and my mental well-being. I'm so grateful to Danielle to be something to hold on to for so much hope. I work so much overtime at a local emergency room hospital and I am just exhausted much overtime at a local emergency room hospital, and I am just exhausted.

Speaker 1:

First off, I am so grateful that people are using this fan mail option to tell me how much they love the podcast or how much hope I bring to your lives. And that was really the starting point of the podcast. I wanted something that I could have as a passion project. That has now turned into more than a passion project, but it was something that I wanted to share with people. The emotional side of finances you can hear my voice change and fluctuate. You can tell when I'm being very serious and when I'm being funny about finances, and I think it is so helpful to know that about finances, to experience finances that way and to hear that it brings you hope, is really, really exciting for me, because that was the goal, that was the whole thing that I was trying to achieve.

Speaker 1:

Now the other part is that you're having this fear and this panic and this guilt about finances and listen, you cannot change that past. All you can do is make good decisions from here on out, and I bet you you can hear my son clicking in a cereal bowl. I'm not even going to have this part edited out because this is too good and it is just real. It's real and raw and honest. Okay, but just know, any of those decisions in the past, you probably made those decisions because they were the best decisions that you could make at the time. Your finances are affecting all of your relationships around you and it's just. It probably feels really overwhelming, tiresome, exhausting.

Speaker 1:

You mentioned the word fear, panic, guilt. I hear you. I was right there. My husband and I were on the brink of divorce, a lot of that having to do with finances. But I do want to share with you that there is hope. There is so much hope, and if you put action into this, you are going to see change. You only need to make one good decision at a time. You don't need to make all the right decisions right now. You just need to make one good decision time and time again and string them together and you're going to be able to change your finances and your marriage around as well, because you can take that same tactic and apply it to your marriage. You can say all right, I'm just going to make one good decision in my marriage today that affects my spouse, and you do that day after day after day, and change will happen. So thank you so much for leaving that fan mail from Paso Robles, california. I hope I'm saying that. Right, let's get into today's episode.

Speaker 1:

Let's get into today's episode. Today's episode is if you're making over $100,000 a year and let's use that as a household income. If your household income is making over $100,000 a year and you're not budgeting, these might be the reasons why you're not doing it, and I'm probably going to rip the bandaid off for some of you really expose you and you're going to say, oh, my goodness, I didn't even realize that I was doing that. So let's just jump right in. I would consider any household that makes over $100,000 is a high earning income household. Let's just lay the land right there.

Speaker 1:

And sometimes, when we have a large income, you may feel secure and assume that your earnings are more than sufficient and everything is going to be fine. You start taking out some loans, some debt, because you think you can afford those payments and all of a sudden, this overconfidence leads to this belief that budgeting is just not necessary at all. And then maybe a few months or years go by and all of a sudden things are starting to feel tight and you have no idea how you make so much money like. This is the most amount of money you've ever made. Why do I feel so restricted? When you meet this certain threshold of income, you believe that you're on top of the world, and I'm going to testify and say that that was me back in 2016.

Speaker 1:

I went from a job making $28,000 to signing for $45,000. So like a significant jump, I would say, and I was broke. I was so broke. So if you are new here, go back to the very beginning, episode one, and I share all about my story, and I did. I really felt like I was on top of the world. I had so much extra income that I started taking out debt and you know, I had a baby, so that was pretty costly at the time too. But I had no understanding of how to manage the money.

Speaker 1:

So when people tell me, oh, I just need to make more money, I need to make more money, that might be part of the problem, but more likely than not, it's spending habits. It's where the money that you already have is going is really the problem. And people think that, oh, I make over a hundred grand a year as a household, everything's fine, everything will get covered. And I'm telling you, I have so many more clients that make over a hundred grand a year than that they don't. I will tell you that it is not the case. And also there's this perception of I'm stable.

Speaker 1:

My husband and I were talking a couple weeks ago and he had said to me when he was 18 years old, 19, 20, around those ages he always spent all of his money because he had this belief that I can always just go make more. If I spend my whole paycheck next Friday, I'm going to have more deposit, everything's going to be fine. And he said I wish I would have known to stop being so dumb. And it's so true, because when you start making a lot more money, you think it's just disposable and that it's just going to keep coming and the paychecks are just going to keep rolling in and at any point people can lose their jobs. I have two clients right now that they've been searching for jobs for six months. Thank God one of them. She actually had a job lined up and recently, in the last couple of weeks, but her and I worked together for three or four months before she actually landed a job. So jobs are disposable. Security is non-existent when it comes to jobs, so the money's not always going to be there.

Speaker 1:

That's why we need to set up a budget. We need to set up a budget so that we can get to the next stage, which is financial security, because again, right, right now, you're feeling fine. You're feeling fine. Or maybe you're listening to this podcast and you're not feeling fine, but at some point you were feeling fine and now you're not, and there's this perception that there was no immediate threat, so I didn't have to budget. But now I'm telling you, if you get back on a budget so quickly, things will turn around for you.

Speaker 1:

Then number two is the desire for freedom and spontaneity. A lot of the times people come to me and they say I've never really budgeted because it didn't work or it just felt super restrictive or limiting and you just might avoid budgeting altogether, resist it altogether, because you want the freedom to spend spontaneously and then also without feeling confined, right like there's nothing worse than getting your budget set and being like I, I only have $5 a week. Yes, sister, you do, because you went and you spent all that money already, like you're living to pay off your past at this point instead of, you know, earning money to pay for your future. And sometimes you go through a budget and it's amazing We've got $1,100, $1,500 left over a month. Where the heck is it going right now? Right, and I have clients. Add in this spontaneity, add in the buffer, add in the fun money, add in all the extras that you know are going to pop up. That gives you that feeling of freedom and access to spontaneity.

Speaker 1:

Here's the other thing is you did not become a high income earner overnight. It typically doesn't happen like that. It typically happens in like $10,000 increases or $15,000 increases, maybe when you're switching from job to job, you know that's where those big chunks of change go to. From job to job, you know that's where those big chunks of change go to. And even at $15,000 a year raise, when you really crack down on the numbers, it's only $400 bi-weekly. It's $800 extra a month. So if you go from making $30,000 to $45,000, you can expect to see about $800 extra a month come in after taxes, retirement, health insurance, all that other stuff. So when I say $800 extra a month, some of you are like, wow, that would be life changing. Okay, great. I agree, for a lot of people that's going to be life changing.

Speaker 1:

But for people that are earning high income already maybe you're going from 60 to 75 and you've been living on a high income already $800 extra a month is not a whole lot in the grand scheme of things. But in your brain you're like, oh, I'm going from 60 to 75,000. Fan freaking, task it. I want to get a new truck. That's $750 a month and all of a sudden, right there, it's gone. It's gone because you upgraded your truck, you upgraded this, you did that, you went on vacation, you went and did this, you took this money out, you borrowed, that you used your credit cards. It goes so, so quickly when you don't have a budget.

Speaker 1:

And this desire for spontaneity and freedom it comes when we increase our income. It's called lifestyle inflation. And that leads me to number three is this desire for instant gratification, because when you get to that level of high income earning, you're more likely around people of higher income as well. You think about it when you go and you start making 80 grand a year and you're beside somebody that's making 80 grand a year. It's a very big difference between them and someone that's making 20 grand a year and I don't mean that in any way. That is degrading, but it is really different because the education is different, the surroundings are different, the people that they hang out with is different. There's so many things that are very different. It's not wrong. It's just natural human nature that birds of a feather fly together or flock together, whatever that thing is Like people, like people.

Speaker 1:

So what happens is Joe over here goes and gets a new truck and you say, oh, I really want a new truck. And you go and get a new truck. And then Sandy over there went and got her eyebrows microbladed. So you want to get your eyebrows microbladed and all of a sudden, we have this instant gratification where we're seeing other people do the other things. So getting in circles that are really pushing you to fix your finances and then also using your finances to catapult you into a better financial future, that is really, really important. Get around those type of people because, I will tell you, they are working on their instant gratification, they are working on their need to keep up with the Joneses, and just because your household makes over 100k a year does not mean that you have the accessibility the financial accessibility I mean to go and do all these things.

Speaker 1:

And the last one I have is the perception of budgeting as a sign of financial struggle. This is, oh, this is gross right, like we think that, oh, people on a budget, they don't have exciting lives, they get to say no to a lot of things. They're just so tight around their money. All they care about is their money. Or they are also really, really struggling. They have to budget because they don't have a lot of money. They can't make things work. They're living paycheck to paycheck. So people might view this as you only budget, it's only necessary for those who are struggling financially, and it's just simply not true. And where this really starts to rub is when you perceive that this is a conflict between your self image and your social status. Like I make over 100 grand a year, why would I need to budget? And then people find out you're budgeting and they're like, like that's not, that's not real friends. We need to manage every single dollar that comes into our presence because if we don't, it is disappearing. And so many people know that. And I'm going to give you an example.

Speaker 1:

I have this client. They're a couple of mine and they've been with me for a year and a half now and they make, I think, around $415,000 a year combined. When we met they had $0 in savings, well over $300,000 in debt. The husband had been managing the finances for a while and his health really declined because of finances, and that's what he told me. He had a lot of stress with finances and it really affected his health, so his wife was taking over. But his wife had no idea how to manage finances at all. She just knew that this was a big mess and she was trying and she couldn't figure out. She found me, saw a lot of suggestions for me and we met and it really clicked and they have been so amazing. They have had over ten thousand dollars in savings for over a year over a year and we were talking about this last month at their session and they said we've never had that much money sitting there for that long. That's part of their emergency fund and they have never had it there for so long.

Speaker 1:

And it all came down to one mindset, because that's really, really important but also budgeting, also budgeting, budgeting, budgeting. Because they couldn't see where any of their money was going. They were bringing home a lot of money every single week and it was disappearing left, right, everywhere it was gone. So, getting all of those numbers collected, put in one place and then setting them up and structuring them on, how am I going to spend my money. I want you to think of it that way how am I going to spend my money? Not what do I have to spend my money on, but how do I get to spend my money? I get to spend it on mortgage. I get to spend it on electric. I get to buy groceries, I get to go out to Starbucks, I get to go to Target, I get to get some things from Amazon. I get to go on a trip for my birthday. I get to go and do this, I get to go and do that. It's so, so important that the mindset that we have is I get to go do these things, not that I have to pay these bills, I have to pay this debt. And once we switch that around for them, they were off like a rocket. They were moving and grooving, they made so much progress so quickly.

Speaker 1:

And the reason that they stay with me is because of the accountability that I offer. It is so important to put a budget together. Even more important to follow it, and sometimes, when we're high income earners, we think, okay, I got the budget. Here's the numbers. Oh, I've got an extra $3,000 this month. Fantastic, blah, blah, blah, blah. Here I go, this is what I'm going to do, and nope, all of a sudden you come back and you're like, wow, where'd that three grand go? You have no idea.

Speaker 1:

So clients stay with me for a long time because I give them a level of accountability. Every month they come back and they've got their action steps that they were working on the previous month and we work on them and we say, hey, this got done, this didn't get done. We discuss why it didn't get done. What were some of the barriers that were in place when that happened? And we work through setting up some type of system to allow them to get through the next phase and do the next step and the next step, through the next phase and do the next step and the next step.

Speaker 1:

So it's really, really important to understand that the perception of budgeting is not a sign of financial struggle, is a sign of financial independence, financial responsibility. That's what that is. And if you are not a high income earner, this still all applies to you. It does not matter if you make 100 grand a year or if you make 20 grand a year. This all applies. You have to be in the mindset that you need to do better with your finances and you want to do it and you commit to it, and then also getting on a budget, following through and just doing the work that you said you were going to do, so so important. Well, I hope this episode was super helpful for you and I hope to talk to you soon. Take care.