Penny-Pinching Won’t Fix These 5 Money Problems, But A Financial Expert Explains What Can

Saving money is the natural response to almost any financial issue, but it might not be the most effective one.

couple struggling money problems penny pinching wont fix Miljan Zivkovic | Shutterstock
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As the economy continues to worsen, people’s minds turn to money now more than ever before. A lot of focus is placed on saving money, and rightfully so. When tough times hit, saving money is one of the first things people turn to so they can stay afloat.

But how much does saving money really help? You can only save so much, and all the savings in the world won’t make necessary expenses go away. Since you can’t save yourself out of every financial quandary, a finance writer and YouTuber named Vee, known as @the_brokenwallet on Instagram, shared some tips that may carry you farther than saving money will in a recent post.

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Here are five money problems that can be fixed, just not by penny-pinching:

1. A too-small paycheck

woman small paycheck money problems penny pinching wont fix Kaboompics.com | Pexels

While it may seem like saving up would help with a paycheck that’s not big enough, if it’s not enough to cover your expenses, that’s not going to change unless you take action. “Cutting costs doesn’t fix a paycheck that’s too small,” Vee said. “Increasing your income through better opportunities, skills or negotiations is just as important as reducing expenses.”

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You have several different approaches to this delicate cunundrum. Perhaps you simply look for a new job that comes with a pay increase, or maybe you take on a side hustle. Another option is to attempt to negotiate a pay raise at your current job. Journalist Melissa Russell noted that it is important to enter this kind of negotiation with a list of accomplishments and the data to back them up. It’s also essential to be aware of the value you bring and know that you’re worth more. These ingredients will lead to a winning salary negotiation.

RELATED: Budget Expert Urges People To Stop Saving So Much Money

2. A scarcity mindset

No matter how much money you save, the chances of it actually changing your mindset are very low. According to Vee, that takes an entirely different type of work. “Shifting from a scarcity mindset to an abundance mindset helps you make confident financial decisions instead of always feeling like there’s never enough,” she said.

“A scarcity mentality sees limitations instead of opportunities,” Forbes contributor Caroline Castrillon wrote. You’ll never believe you can have more if you live in a place of scarcity. To work on developing more of an abundance mindset, Castrillon recommended focusing on the things you already have, surrounding yourself with people who share abundance mindsets, looking for gratitude and possibilities, and trying to see situations as opportunities for everyone to win instead of one person to win and the other to lose.

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3. Increased costs

increased costs money problems penny pinching wont fix Jack Sparrow | Pexels

It doesn’t really matter how much you save if it’s still not enough to keep up with inflation. “Frugality doesn’t stop rising costs from eating into savings,” Vee explained. “Growing your income and investing wisely can help outpace inflation, rather than just trying to spend less.” Because the issue is, even if you aim to spend less, increasing costs will ensure you can never really get out ahead of the problem.

Fidelity rightfully acknowledged that it’s difficult to enter the world of investing as a beginner. They suggest starting out by focusing on what you’re investing for, like your retirement, instead of thinking about what you’re investing in. From there, you’ll need to decide what kind of account to use and what to put your money behind. Luckily, a financial planner can help with these more technical aspects.

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RELATED: 7 Well-Meaning Phrases That Financially Shame Kids Without Their Parents Realizing It

4. Not understanding money management

Knowing how to manage your money is an essential skill. You could save thousands of dollars but still handle it poorly if you lack money management skills. “Cutting back won’t help if you don’t know how to manage what you’ve got,” Vee said. “Learning to budget, track and allocate money effectively ensures that savings and spending align with your goals.”

To start managing your money, Ramsey Solutions suggested tracking what you earn and what you spend. To do this, you can use one of the many methods for tracking expenses, like a spreadsheet or app. “The more you track expenses, the more aware you’ll be of your spending,” they said. “No more surprise transactions derailing your budget — you’re the one in control.”

5. Money trauma

woman money trauma penny pinching wont fix Mikhail Nilov | Pexels

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If you have negative beliefs about money or unresolved money trauma, there’s no way you can save enough money to magically get over that. “Frugality won’t fix deep-rooted money trauma or beliefs,” Vee stated. “Addressing your financial mindset and emotional relationship with money is key to making lasting, positive changes.”

Instead of just saving and hoping for the best, you’ve got to overcome the issues you have with money. According to Joyce Marter, LCPC, financial or money trauma is what is "triggered by significant financial distress” and can include everything from homelessness to unemployment. “As a result, individuals may experience heightened anxiety regarding money, with many feeling fearful about making financial decisions or planning for the future,” she said. You may need to work with a financial advisor or even a mental health professional to overcome this trauma.

Saving money is not a bad thing by any means. However, it’s important to acknowledge that it can’t serve as a band-aid to every financial problem you will face. Sometimes, you will have to employ other tactics to keep yourself financially healthy. It’s good to know what those things are and keep them in mind so you’re prepared.

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RELATED: People Who Constantly Attract Financial Abundance Follow These 6 Money Rules, According To A Spiritual Healer

Mary-Faith Martinez is a writer with a bachelor’s degree in English and Journalism who covers news, psychology, lifestyle, and human interest topics.