Have you ever sat up late into the night, staring off into the darkness, and wondering how you were going to make it to the next paycheck? Do you have enough money to get the basics, or you don’t have any money saved for illness or emergencies? Of course you have. Most of us have at some point, have wondered, at least once, how that medical bill was going to get paid or if we will have enough money to get gas to get to work. But by educating yourself and following a few time-tested rules, you will be able to put some money aside and for emergencies or a dream vacation.
Track Your Spending
One of the most important rules of any financial change is to sit down and create a budget. This is not only desirable, but absolutely necessary. You can’t expect to save any money if you aren’t aware of how much is coming in and how much is going out.
When creating a budget, one should first be honest about your expenditures. Track your spending. My suggestion would be to track your spending for a week. Don’t make any changes yet (unless you absolutely have to). The reason I suggest this is because it’s like making dietary changes in your life. The nutrition experts will tell you to count your calories for a day or two before you make any changes. This snapshot of your daily life, in many ways, can become a wake-up call. Once you realize how much spontaneous spending you are doing, it will surprise you.
There are many ways to track your spending. There are phone and computer apps, Excel spreadsheets, or you can even go the old-fashioned route of pen and paper. Then write down (or enter into your app) everything that you spend for that week. At the end of the week, add everything up and then subtract it with how much you bring in on a weekly or semi-weekly basis. This realistic snapshot will be your first step to change.
The most common rule to stop living paycheck to paycheck is to spend less than you make. This is probably one of those “duh” moments you get when you say “Well, of course you want to spend less than you make if you want to save money!” But this is not as simple as it sounds. No matter how much we make, whether it’s minimum wage to $100,000 a year, we often buy things spontaneously. (Also called unplanned purchases). At times, this is necessary for emergencies. But if we (and I’m a big offender here) walk by the chocolate and say “Oh, $3.00 isn’t going to hurt the budget” or see a shirt that we just HAVE to have (it’s only $10.00!), you will be surprised at how quickly your money dwindles away.
This is where creating a budget is so necessary. You must make conscious decisions to say no to those extra expenditure. This can be as difficult as it is to saying no to chocolate at certain times. But keeping to a budget and avoiding unplanned or extraneous expenditures can help you realize that you had more money than you originally thought.
Cutting Expenditures (or Downsizing)
Downsizing is a great way to cut expenses. One example of downsizing is buying a smaller, less expensive car or spending less on clothes and shoes (thrift stores can come in handy here). Get a smaller house or apartment. Look at your current bills: can you find a less expensive package for you cable/internet bill?
Create a separate budget just for your grocery bill. Don’t go shopping when you are hungry. You are more likely to make more of those unplanned purchases when you are hungry.
One of the most commonly used tips suggested by most financial gurus to cutting expenditures is to limit your entertainment budget to eating out less and cooking more at home. Not only is it healthier for you, but you will be surprised at how that $8 to $10 lunch 3 or 4 times a week can quickly add up. Let’s imagine that you are spending $40 to $50 a week on eating out. Imagine how quickly that adds up. You could save up to $200 a month just by eating a few more sandwiches from home!
These are just a few suggestions that will help you in your journey to better finances and how to stop living paycheck to paycheck. Ladies, it’s time to stop living in fear and take a hold of our lives and make those necessary changes to finding financial peace of mind.