What do you do as soon as you get your paycheck? If you’re like most people in the U.S., you spend on yourself and justify the splurge with all the hard work you’ve put into your job. You so deserve that new pair of shoes or that expensive dinner and a glass of wine. There’s nothing wrong with spending on yourself, and it can even be part of your monthly budget.
The problem is when you always go over budget on these splurges, and you’re left with insufficient funds to cover your basic needs. You don’t need to earn more; you just need to manage your money better.
Pay for Products or Services in Advance
Say what you want about online shopping and how it makes people more frivolous, but it’s good for one thing: paying for things in advance. This doesn’t mean you should spend all your money on online purchases, of course. Just use the idea of paying in advance to tackle important and hefty purchases. For instance, you can pay your utility bills before their due date and set aside payment for your fence contractor in West Valley City before they start working on your fence installation. Even mortgage and car payments can be paid in advance, which leaves you with a more realistic view of your disposable income. From this smaller amount, you can appropriate a portion for your monthly shopping expense, and you won’t feel guilty for forgetting to pay the bills.
Set up Automatic Payments
Spending is so much easier than saving. Transitioning to a save-first attitude is definitely not easy. You’ll think you won’t have enough left, and you’ll probably want to spend first and save whatever remains. When you don’t have a handle on your expenses, most of the time, there’s nothing left to save. The better way to save is to set aside a comfortable portion of your salary through automatic payments. Financial experts suggest opening an account in a different bank so that you will not be tempted to transfer money back into your checking account for easy spending. Try a 20% savings this coming paycheck. If you struggle with this amount missing from your spending money, you can always adjust your savings next month. What matters is you’re trying and finding out your limit.
Use the Envelope Method
It’s easier to budget when you have your money allocated to certain categories. If you already have a budget in place, it’s even easier to stick to it if you hide your cash in envelopes labeled with each category. This way, you will not be looking at your money like one big amount that you can spend anywhere you want. When you know how much you have left for food and transportation costs, you’ll be more conscientious next time you buy that second Starbucks for the day or take an Uber instead of using public transport.
No matter how much or how little you earn, you should learn to manage your finances. Know where your money should go, and respect your budget so that you can stop living paycheck to paycheck.
