Spending Half Your Paycheck as Soon as You Get Paid? Here’s How to Change That.
Ever catch yourself counting down the days to payday?
Maybe you charged “the perfect” pair of running shoes last month and the bill just came in. Or maybe your check-engine light just came on and you’re dreading the repair. Either way, that paycheck can’t come fast enough.
For roughly three-quarters of Americans, this is a way of life—an endless cycle of money going out almost as soon as it comes in. Who needs that kind of stress in their lives? Certainly not you.
We have this crazy idea that spending money shouldn’t be nerve-racking. By breaking the cycle of overspending and setting up a solid budget, it doesn’t have to be! We’ll show you how.
1. Start an Emergency Fund. Before we start talking budgets, let’s talk emergency funds. This money keeps your budget on track if your water heater dies or your car breaks down. That’s why it’s so important to throw $1,000 into your emergency savings right away.
How? Sell some things, cut back on restaurant visits, and buy generic. Remember, these are temporary measures. Once you have $1,000 saved, you can loosen up a bit. Just don’t empty your emergency fund on that annual seaside getaway. (See #5 about saving for a vacation!)
Related: 10 Items You Should Buy Generic
2. Make Your EveryDollar Budget. You work too hard for your money to get lost mid-month in budgeting No Man’s Land. That’s where an EveryDollar budget can help. Think of it as GPS guidance for your money instead of a napkin-drawn map to nowhere.
When you create a plan for your income, you will manage it better and stretch it further—without earning a penny extra. Nice. And if you’re married, be sure your spouse is along for the ride.
3. Put Your Priorities in Place. After you plug in some numbers, give your budget a good second glance. Is your paycheck covering the essentials first, like giving to your church or charity, paying your bills and debts, and saving for future goals?
If it is, go ahead and budget for some fun—like those killer gym sneaks. When your essentials are in place, you can breathe easier knowing how many shopping trips and restaurant outings you can actually afford. Ahh . . . just feel that stress melting away.
4. Track and Stick to Your Budget. So if you’re about to make a purchase at The Home Store that will send you over your shopping budget, ask yourself first, Do I need this right now? If not, wait until next month and adjust the amount you budget accordingly! If it can’t wait, ask yourself, Can I buy it for less money somewhere else? And will I still be using it in six months? If so, rearrange your budget to make room for your purchase.
New stuff is great, but it’s not always necessary. Why not buy that tool set or those designer curtains used instead? You can definitely afford it, and no one will know the difference! We’d much rather you own your stuff than owe on it.
5. Save for the Big Stuff. What about the really expensive stuff like a summer vacation or Christmas gifts? This is where a fund comes into play.
A fund means you save a specific amount each month for a certain length of time. For example, if you want to go on a $1,000 beach vacation in roughly eight months, start putting aside $125 each month until then. Imagine a blissful week in the sun without a financial sunburn afterward! Perfect.
Give your money some room to breathe with an EveryDollar budget. Simply tell all your dollars where they will go before you spend them in the store. Then stick to your plan, save for what you want, and watch your money last all month long. Because living paycheck-to-paycheck is no longer the lifestyle for you.