Are you one of the millions of Americans living paycheck to paycheck? If you answered yes, it is time to get matters under control. For some, living check to check is a matter of poor circumstances and/or bad luck. For most however, it is poor planning and lack of discipline.
So, more than likely, if you are reading this, you alone are causing your money problems and you alone can set things right. Here is what you need to do.
Get Your Budget Right
Living check to check, you probably do not even have a written budget and this is a huge issue. You need to be able to account for where every dollar is spent. This probably sounds like a big pain, but it is not that hard to write up a simple budget.
There are a lot of spreadsheets available online but basically all you have to do is list your bills and expenses. Include set amounts for things like food and entertainment. Once you have your list, you can add it up and then compare it to your take home pay.
Chances are good that things are tight or that you are not even bringing home enough to cover your monthly bills. This leads you to come up short days before you get your next paycheck and likely forces you to run up credit card bills.
To get your budget in order, first add one more expense, savings. You should be saving 10 percent of your take home pay. It is the only way that you will have both money for emergencies and a chance at retiring. Once you have savings added in, you have your real budget and it is time to make some cuts so that it matches your income. This might be easy or it might require some drastic changes. Here are some areas to look at.
For a family of four, a food budget can be a big part of your overall expenses. Luckily, it is one that is easily manipulated. The best way to do that is with meal planning.
With meal planning, you will write out the meals you plan to make during the week, including snacks. Then, you will make a shopping list for the week. Planning out your meals allows you to buy just what you need which eliminates food waste.
Another way to save on food is to cut out those expensive meals outside the home. An occasional dinner out is fine, but if you need to make room in the budget, it should not be commonplace. Lunches can be just as bad, especially if you eat fast food every day. Cutting out the drive thru could save each adult in your household 200 dollars a month or more.
Next, take a look at all of those monthly subscriptions.
If you are still paying for subscription television, now is the time to cut it out. This alone will save you over 100 dollars a month and might even encourage you to get away from the TV more. Replace it with low cost or even free streaming services.
Gyms can also be a huge money waster, especially if you belong to a big amenity filled club. Start exercising on your own or, if you must, join one of the many low cost discount gyms.
Besides the above, now is the time to look at any regularly occurring charges and judge whether they are worth the expense.
If the little things do not add up to enough money, it is time to start taking a look at the big expenditures such as housing costs.
Renters have it easy in this area. All that you have to do is move to a cheaper rental when your lease expires. If you are stuck in a long lease, weigh the cost of breaking it versus the savings of a cheaper rental.
Owning a home makes it more of a challenge to downsize but it will likely be more rewarding. If you have been in your home for more than a year or two, you likely have some equity. Sell, move to a cheaper place and use part of the equity to pay off credit cards or to build an emergency savings.
Next take a look at your vehicle. Can you downsize to something with a more affordable payment or that gets better fuel mileage? Probably, and that could save you hundreds of dollars a month on vehicle expenses when you take into account the savings on your payment, fuel costs and auto insurance.
Everything Is Fair Game
When it comes to saving money on your bills, the above sections will yield the best savings, but everything is fair game.
Shop your auto insurance to find a better premium. Compare electric company rates if you are in a deregulated area. Even look for a cheaper internet provider or downgrade to a lower speed to reduce costs.
Every dollar counts when trying to balance a budget.
Summing It All Up
If you are living paycheck to paycheck, it is crucial that you take steps to get it under control. Make it a point now to balance your budget and create room for savings. This might require drastic actions, but sometimes drastic actions are the only way to accomplish a goal.