It can be incredibly frustrating when it feels like you're living paycheck to paycheck each month. While it's a tough cycle to break out of, there are some steps you can take to help change the way you use your paycheck. Here are some steps for you to get started:
You may think the problem is that you don’t have enough money when the reality is that it’s just going to the wrong places. Track your spending for a month. This doesn’t just mean expenses such as rent/mortgage, groceries, electricity, etc. Every single thing you spend money on should be noted.
Once you track your spending, find places that you can make reasonable cuts. Obviously things like a credit card payment or the rent are non-negotiable. However, that $50 at Starbucks or $200 you spent eating out may be. You may have to make some adjustments to your lifestyle and give up some of the wants to help provide for the needs.
Once you’ve tracked your spending and know where you can make cuts, start laying out a budget. Separate your fixed expenses (such as a car payment, mortgage, etc.) and non-fixed expenses (entertainment, electricity, etc.) To find out more about budgeting, click HERE.
Find a system for organizing your finances that works for you. Whether you keep paper files of everything or store everything digitally, it should be consistent across the board. For more about organizing your finances, click HERE.
FOCUS ON DEBT
Build a sustainable plan to get your debt paid off. Arrange your debt from highest interest rate to lowest. Check out more about how to create a debt elimination plan HERE.
HAVE EMERGENCY SAVINGS
Nothing can derail living on a budget like an unexpected expense. Start saving money that is specifically for emergencies so you won’t have to rely on other savings, such as retirement, or using credit cards and getting back on the cycle.