Many people live in a vicious cycle of not having any money just days after being paid. Then they worry how they are going to live until they receive their next paycheck. This creates stress and wreaks havoc on their lives. This feeling of helplessness is further escalated if an emergency arises and they have to scramble around trying to figure out how they are going to handle it. They could borrow the money until payday and but then the cycle just repeats itself. It’s important to track your expenditures so you can see where your money is going.
What the Experts Say
Financial experts all seem to be on one accord when they advise people how to relieve themselves from the woes of living from living paycheck to paycheck. The way to increase their savings and reduce their debt is to make a plan and then attack their expenses head on. In other words, they need to budget their expenses and live within its parameters.
Begin by listing your fixed expenses. For most people this is mortgage or rent, student loans, and property taxes. Your other monthly expenses might include food, clothing and other miscellaneous items. Be realistic when spending for your miscellaneous expenses. Be careful not to go over the budget, yet make it comfortable to live with.
Fool.com suggests adding all of your expenses and dividing them by 12 months. This is the amount they say you need to put into savings each month. Following this plan will eliminate the stress of trying to come up with money for an unplanned emergency.
Curb Your Spending
There are other ways to get out of the paycheck-to-paycheck living cycle. Try getting a second job and put that paycheck into savings. In today’s world it’s worth it to have a second income. You will receive extra money to put into savings or to pay off debts. A second job also gives you a little employment security if you lose one of them. Reduce your living expenses by doing without some things. Don’t give up cable entirely. Instead give up the premium package. Dine out less often. Go out once a month instead of every weekend. Look at your favorite establishment’s website for coupons and plan your outing around them. You can also clip coupons regularly to save on your grocery bill, and car repairs, etc.
If the cost of maintaining your house or apartment keeps you in the hole, get a less expensive home or advertise for a roommate, as well as,devise a savings strategy. Some people play games with themselves by setting up a savings account across town, without a debit card. Having the money automatically deducted from your paycheck and going directly into the savings account ensures that it gets deposited without your interference. Put away credit cards and pay with cash. When you do need to use credit cards, make sure they have the lowest interest rates. Get into the habit of making small changes and regularly putting your savings away for a rainy day. This can save you many sleepless nights, worries and possibly illness.