Why am I always struggling to make ends meet?

Q: However much I work and try to save, I still struggle to make ends meet. It’s really become a problem to stay afloat financially. Do you have any suggestions so that I’m not constantly worrying about money?

A: One great irony is that despite rising incomes, many Americans complain of having to work harder and harder just to maintain a decent standard of living. But economists say that really isn't the case.

If you a reasonably typical American, the fact that inflation has been kept at bay means that the portion of your income you need in order to achieve a nice lifestyle is actually smaller than it used to be.

The problem is our expectations. We want big-screen TVs, Palm Pilots, sport-utility vehicles, and cell phones. For many people, eating out isn't for special occasions anymore; it's an every-other-day occurrence.

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In fact, one financial planner told Money magazine that it's the people with the biggest salaries who have the least sense of how quickly they're burning through their income. They work so many hours that they wind up eating out all the time and paying for all types of services, from housecleaning to landscaping to day care.

So how can you keep your spending in check? First, you should consider these spending figures from the Bureau of Labor Statistics and see how you measure up against the average American household (you should try to be lower in each category):

• 33 percent of their income on housing
• 19 percent on transportation
• 13.5 percent on food (with more than 40 percent being spent in restaurants)
• 5 percent on health care
• Other significant expenditures include taxes, entertainment and clothes.

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Then take the following advice to heart:

Monitor your spending closely. My husband and I save all of our receipts and then enter them into a computer program (members of my online program Your Road to Financial Happiness can use the Spending Tracker, to be found there). That way we know how much we're spending on clothes, on housing, on gifts, etc. If that's too much for you, then simply take a close look at your fixed expenses (to make sure they're in line) and your variable expenses by using each month's credit card bill to track them.

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Have goals. The easiest way to say no to that new pair of shoes is to know that you need the money for next month's vacation in Florida or next year's tuition bills.

Jean Chatzky’s Bottom Line
This week: Stretching kids’ allowances
Allowances are great — they help teach kids about financial (and other) responsibility. But when your kids are trying to buy something expensive, sometimes an allowance just won't do the trick. Here are a couple of ideas to help your kids stretch their savings:

The 401(k) for kids. Try offering matching dollars. Tell your child that you know saving is hard, so to help you're willing to match each dollar he or she is saving for a particular big-ticket item.

Work for hire. Particularly industrious kids may also want to take on extra chores. Consider paying them for jobs that you might pay outsiders to do, like weeding the garden, shoveling the sidewalk, or ridding the upholstery of pet hair.

Jean Chatzky is the financial editor for “Today,” editor-at-large at Money magazine and the author of “Talking Money: Everything You Need to Know About Your Finances and Your Future.” Her latest book, "Pay It Down: From Debt to Wealth on $10 a Day," is now in bookstores. Copyright ©2004. For more information, go to her Web site, www.JeanChatzky.com.

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