Do you find it hard to get ahead financially? Is it a struggle for you to cover all of your bills from one week to the next? Though you have an income, when your earnings outweigh your financial obligations, it can seem nearly impossible to keep it all together. You don’t seem to have enough income to save for emergencies, and you barely have enough to pay for the things you want. Living from paycheck to paycheck is stressful, but you can change your financial position with a few basic tips.
Create a Monthly Budget
Budgeting is beneficial for more reasons than one. When created accurately, your budget is a clear picture of where you are financially. It allows you to see what you have coming in and more importantly, how much is going out. If you don’t presently have a budget, making one is the first step towards getting off the paycheck to paycheck treadmill.
When creating a budget you should include things like your rent or mortgage, utilities, household maintenance, vehicle payments, insurance, and maintenance, memberships, medical expenses, child or pet care, and debts (loans, credit cards, etc.). If you don’t have exact amounts due for these expenditures, simply determine on average how much you spend. Then, subtract from your income to see what you have left.
Get Real About Your Spending Habits
Sometimes, a household has enough money to cover their expenses, however, due to poor spending habits, the money that could be used for real purposes is frivolously spent on things you don’t necessarily need. Now that you have a clear picture of everything you’re paying for on a monthly basis, are there things that can be eliminated or reduced?
Here are a few examples of where and how you can cut back:
- Reduce your energy bill by turning off unused electronics, turn down the thermostat, or have your heating and cooling systems serviced so they aren’t overworked.
- Cut down on the cost of gas by combining errands. For instance, going shopping at the grocery store near your job after work as opposed to waiting until the weekend and traveling further.
- Instead of spending money on ordering your lunch daily, prep and pack your own lunches for work and school.
Review every area of your spending and look for ways to save or cut back on those costs. This should free up some money that can cover your other bills.
Pay Down Debts
One area that seems to keep families on the paycheck to paycheck cycle is debts. If you’re dealing with credit card bills, student loans, personal loans, and other forms of debt, that is money that you can’t use to pay for the things you need. You should create a plan of action to help you get out of debt. Some ideas include:
- Use a short-term loan to get delinquent accounts off your plate. There are companies like MaxLend that offer online cash advances that can be used to pay off a small debt. This will improve your credit, eliminate the debt from your budget, and allow you to repay the cash advance in smaller, more convenient payments.
- Transfer high-balance, high-interest rate credit cards to a 0% balance transfer card. This saves you money on interest and allows you to put more of your money towards the principal balance to pay the debt off faster.
- Negotiate better terms. Contact your creditors and ask for more affordable payment arrangements, settlements, or a reduction in interest rates, late fees, and penalties.
After creating a realistic budget, getting real about your spending, and paying down debts, you should be able to successfully save money and free up funds that can be put towards more beneficial things like your bills. If you’re still struggling, it may be necessary to find other streams of income, downsizing, or consulting with a debt counselor for further assistance.