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Why do I spend all of what I earn?

Most people spend almost exactly what they earn, meaning they are not saving or investing. This habit makes it very hard (impossible) for them to create wealth or even accumulate enough in savings for a comfortable retirement. Not saving also means you are more likely to have to borrow to fund larger purchases such as holidays or a new car down the track.

So, knowing that it’s not good for our futures, why do we tend to spend more than we earn?

The main reason is due to the fact we have a tendency to meet our commitment once paid and then spend the rest. We don’t make saving a priority and therefore it tends not to get done.

Humans by nature are procrastinators, so no matter how much we plan in our minds we never seem get around to doing that budget or setting up a regular/automatic savings plan.

5 easy ways to become a saver

  1. Pay yourself first – set up a regular amount to be debited automatically from each pay into a separate savings account. Try and make sure that this savings account has no ATM access making it difficult to access. Not being able to obtain funds on impulse will allow you to think about whether or not you really need it.
  2. Budget – most people don’t have one but they can be enlightening and even liberating helping to identify where all your money goes.
  3. Be a little pessimistic – when preparing your budget put aside funds for ‘the unknown’ – car repairs, dental bills etc.
  4. Credit cards – reduce your limit therefore reducing the temptation to spend more and make sure you pay off your entire balance each month
  5. Reduce your consumption – one of the great benefits of budgeting is that it can help identify any unnecessary expenditure you might be making.


Spending less than you earn will, without doubt, involve some short term sacrifices and a little pain but should not have a dramatic effect on your lifestyle. The pain will be worth it as you begin to take control of your finance and begin to make inroads into creating or protecting your wealth.


Knight Financial Advisors Pty Ltd is a Corporate Authorised Representative of NKH Knight Holdings Pty Ltd (AFSL 438 631) ABN 30 163 152 967. The information contained herein is of a general nature only and does not constitute personal advice. You should not act on any recommendation without considering your personal needs, circumstances and objectives. We recommend you obtain professional financial advice specific to your circumstances.

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