You know the drill. The paycheck finally arrives, which means you can finally get on top of those mounting bills, and (hopefully) live a little – albeit momentarily – before the bank balance is back to bleak again as you count the days until the next paycheck.
Many are trapped in this vicious “hand to mouth” cycle, so you’re not alone. But is there any escape from this all too common rut? Absolutely. There’s always a better way to take control of your finances. Like any well-thought-out financial strategy, it all begins with a budget.
Start a Budget.
The first step toward breaking the paycheck-to-paycheck cycle is setting some time aside to gain a clear understanding of how you are spending your money. Track every single expenditure – even the smallest ones – for a month. Create a list of monthly expenses, compare it to your income and determine ways to keep your spending levels as far below your income as possible. You can use a spreadsheet, or download a budgeting app to streamline the process and keep spending in check for you.
Find Fat to Trim.
Consider what you can live without, and evaluate or cull any services you don’t really need. For instance, could you switch to a cheaper cable plan, or can you bundle your phone and Internet services? Do you actually use that gym membership? Perhaps there’s a cheaper gym you could join instead. Is the N600 morning espresso a must, or could you whip up a coffee at home as a cheaper alternative? How about cutting back on the entertainment one night a week, and putting that cash toward a bill? And savings from discount coupons are nothing to be sneezed at. It can be surprising how much a little here and there can add up to across the financial board.
Reap Savings from Self-improvement.
Quitting a vice, such as cigarettes, can save thousands over the course of a year. Instead of buying another pack, put the money in a savings jar. You’ll not only save your health; you may even put enough away to pay off that credit card or take a vacation as a deserved reward.
Explore ways to supplement your paycheck with additional income streams. There are any number of ways to make some extra pocket money online these days. All you have to do is look. Participate in paid online surveys, or sell items you no longer need. If possible, take on an extra part-time gig or channel your talents into a manageable sideline business venture. Put any supplementary income toward your bills, or add it to your savings. You can easily make a dramatic overall impact to your budget. And while you’re channelling energy into making money, you’re less likely to face temptation to spend it.
Plan Ahead for an Emergency.
The problem with paycheck to paycheck is that there’s generally no cash available to fund an emergency should one arise. However, every budgeting plan should include an emergency fund in the event of an unforeseen life mishap, like a health scare or sudden unemployment. Determine a safe emergency fund balance (enough to cover three months of overall expenses is generally recommended); and when savings exceed that figure, you can channel them into something else, such as a reward for your savings efforts, or a deposit into an account for an eventual house down payment.
Escaping the paycheck-to-paycheck rut is ultimately a matter of choice. Do you genuinely want to break from the cycle and expand your financial horizons? Then consciously do something about it, because your financial situation is not going to magically fix itself. Establish a sound budget; uncover ways to minimize expenses, boost income and save…and take action on these every day. The tangible results will emerge pretty swiftly, as will the peace of mind knowing it is you who has control of your life – not your paycheck.