Now let’s travel through the more-typical, non-ideal funnel, in which much can and will go wrong. (The previous post, about the “ideal form” of the money funnel, described what a pay period is like when everything goes according to plan.)
First off, on payday, you may get a “low paycheck.”
A low check means that even as you’re on Step 1, trying to cover your priorities, you may run out of money. One way to cope with that is by borrowing the extra.
Once your priorities are covered, in order to have money for the “everything else” of Step 2, you might have to dip into the money you worked so hard to save up.
You’ll also have to pay interest on that money you borrowed.
When you barely have anything left, you enter a period of austerity in which you scrape by, trying to spend as little as possible.
But when you’re close to balance zero, it’s easy to overdraft by accident. More fees.
When an emergency comes up and you don’t have any cash or savings cushion left, you might charge it, and rack up more credit card debt and interest.
That’s the nightmarish, but quite common, version of money management on a volatile income: unpredictable amounts of money going in and out of your account, your balance going up and down, fees and interest getting added left and right, and money (along with more fees) coming out through overdrafts you didn’t even mean to initiate.
The persistent experience throughout it all is scarcity — not just of money, but of information.
In this type of money funnel, there’s a frightening scarcity of good information about some basic, important things: how much money you’re going to get, how many of your priorities you’ll be able to cover with that, how much you’ll have left, and how much you even have from moment to moment.
As many Even members have put it, in this funnel you have no clear “visual” of what is actually going on with your money. It’s all a blur. And the more time you spend inside that blur, the harder it is to see things in focus and feel confident that you can make your way through. As one of our members, Amanda,* told me: "When instability becomes the norm and you operate in that realm all the time, even when you have moments of prosperity, it’s really difficult to keep focused and manage your money correctly and make it work for you. Because you’re always stressed about it, no matter what — which affects your decisions. It sometimes makes you make decisions that aren’t great or just aren’t profitable for you. If you’ve become accustomed to operating in that way, no matter how under control you may actually have your expenses, they never feel like they’re completely under control."
*Amanda gave permission to be quoted in this post.
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