As quickly as your paycheck comes into your account on payday, it seems just as fast leaving, then waiting until the next check in a couple weeks to have a positive balance again. Living paycheck to paycheck is common, however not ideal, especially if you think about how scary it would be if you were to lose your income to a job-loss. By making a few moves to get financially ahead, you can give yourself a little cushion and set yourself up for success going forward.
Start Tracking Spending
When it comes to spending with cash, once it’s gone, it’s gone, and maybe even seeing the money actually leaving your hand and going into the register could be enough to think about each purchase, but in the days of credit cards with a quick swipe, the purchases can quickly add up, leaving you to wonder how you can payoff the credit card statement by the due date. Even worse is online shopping, making purchases with your saved card and seeing the boxes pile up on your porch. By taking last month’s debit or credit card statement everything and going line by line, you can give yourself a wakeup call in how much you’re spending each month, but it’s where you go from there that’s important.
Reduce Expenses
In order to have money at the end of the month, sure, it’s as simple as having more money come in than go out, but by cutting expenses is where you’ll see the great lift. You may not think that a gym membership would make much difference, but if you’re spending $50 a month and not going, just think of what you could do with an extra $600 a year. Even more, what about cable, and all of the hundreds of channels that you pay for and don’t watch, let alone tune in without what’s on your DVR? By even saving $100 a month that quickly adds up to $1,200 a year.
Put Your Money to Work
Retirement may not be the first thing on your mind, whether you are new in your career or still have a decade or two until you’re ready to walk away, but that doesn’t mean you should put off saving. While it’s recommended to have a few months’ worth of expenses in an account for easy access in need, the rest of your money could be used for investment in the long-term, in a combination of stocks, mutual funds, bonds, even your 401k account. The earlier you can start saving, the more time there will be to grow into your nest egg. Unsure about how and where to invest? Check out free resources like the Motley fool stock advisor review for advice and options.
Stay Within a Budget
While you may not want to account for every dollar spent within a month, at least allocating certain funds to food, gas, spending can be a great way to put a curb on money going out and trying to stick with a plan to free up extra money every month in order to focus on building your emergency fund, paying off credit card debt, or saving for retirement.