Start tracking your spending and income now.
The stress of living from paycheck to paycheck can be unbearable. Poor decisions and a lack of options lead to negative balances costing more money. Calculating your income, spending, and debts is crucial. Finding out where your funds are going is the first step. Sometimes, this is simply evaluating monthly credit card bills. Others may need to keep receipts or a journal of all spending. With W-2s, 10-99, and other budget tools, income is simpler to track. If you have many types of income sources, make a spreadsheet. Determining your cash flow is a significant first step to a financial nest egg. There are many tools to help you keep track of your spending. The best tool you have is the motivation for a better life.
2. Cut the waste out of your budget.
Once you’ve figured out where your money is going, you can cut costs. Removing unneeded bills can be the easiest part of saving because you can cancel unused subscriptions, get a better rate on memberships or fixed expenses, and divert the funds to savings. So, Move wasted funds to savings for less stress. Again, your inspiration is to stop wasting money so you can stress less and enjoy more. The most considerable motivation to help is your why. Do you need a new car, want to travel, are you saving for a home, or are you just sick of living paycheck to paycheck? Every time you make a purchase, ask yourself if this is leading to your why. If not, ask yourself if the purchase is a want or a need and proceed accordingly.
3. Debts?
Budget a payoff schedule. Analyze your debts and create a realistic plan to pay them off. Sometimes, this starts with ending the pattern that leads to the deficits. Allowing you to anticipate costs and setting aside an emergency fund opens up opportunities. Try saving a small amount weekly to pay for the expected recurring costs like car insurance and medical expenses. For example, save for Christmas 6 months ahead by dividing the total anticipated cost by 25 weeks before black Friday. Cash for holiday purchases prepares one to make the most of their funds. Removing or rearranging a lifestyle that begets debt is essential. The gastric bypass will make you thin: a lifestyle of healthy eating and movement keeps you that way. Organize debts and stop creating new obligations without a repayment plan. There are many ways to pay off debts: snowballing, the envelope method, and kakeibo are a few options.
4. Why do your credit ratings matter?
Unfortunately, with bad credit, you pay more for everything! It is a sad truth. Your credit decides everything from secure housing and deposits on basics like electricity and water to car loans, insurance, and much more. Also, many careers are closed if you are a credit risk.
The worst mistake you can make is overusing credit. If you can’t pay it off monthly, save for it. Don’t just think about the monthly payment but also the final cost. Nothing is worth the average interest on credit card debt. There will always be emergencies, vacations, and happy hour; however, living beyond your paycheck is not an emergency. It’s a crisis! If you have debt, make a plan to reduce it. Suppose your income does not cover your expenses. Figure out why and STOP IT. You will do this by cutting spending and increasing revenue. You will continue to save while you are reducing debts.
You are allowed one free copy of your credit report every twelve months. Here is the best place to get that free report: https://www.annualcreditreport.com/index.action. You are also allowed a copy after you apply for credit and are denied. Further, you are entitled to get in writing why you were denied credit or a loan, and if it was because of your credit report, you have a right to a free report at that time. Use the tools available to make good decisions.
5. Take a spending diet.
Whether you are having a difficult time or not, a spending diet is a great way to build habits for a more profitable future. Once you have analyzed your budget, redirected waste, and made a debt payoff plan, try using only cash for a month, a week, or a day. How and why, you ask. How? After you pay your fixed expenditures, fill up the car, buy groceries, and give yourself an allowance for other expenses. Take that cash out of the bank and only use that amount for the allotted time. We often spend more on small items, and having a fixed amount gives us time to analyze choices. It allows you to test how much money you REALLY spend and how long it will last. It is a great way to carve out good habits. For example, I bring a homemade lunch to work every day. I have created a healthy routine. I place my lunch and snacks in a bag nightly, usually half my dinner. Planning means I don’t rush around during lunch or buy snacks from the vending machine. It is healthy for my body, mind, and wallet. What you decide to do depends on your desires and needs. You can do anything you want, but it can be challenging to do everything you want.
6. Determine the difference between needs and wants.
The differences are tricky; you want to keep up with friends and look great. However, you don’t need the budget-busting bunch or designer handbag. Try meeting friends for a walk in the park, pizza, and a movie or happy hour. And make purchases everlasting for your lifestyle. Save for the expenses you want and enjoy. A great decision would be telling a friend you are flattered to be asked to be in the wedding, but you would not be able to because of the time and expense. You would love to attend, however. But please, save to be a part of your best friend’s wedding, within your limits. If your true goal is world travel, skip the expensive car or have a roommate so your real dreams stay doable.
7. Count and save your pennies.
Don’t be cheap, but save your money, too. It is wise to evaluate choices before they arise, like deciding where to eat, and fixed expenditures like insurance and gas can give your budget space. For example, is your AC so cold you need to wear a sweater, leaving you with sky-high electric bills? I prefer to monitor the electricity, go to the movies, eat out, or get a gym membership. Waste not want not is true. Be alert to using your funds for your wants and needs.
Saving also applies to earning. Evaluate your career, and please take advantage of learning opportunities at work and online. Reverse today’s work environment that creates bitterness and changes your attitude. Learn from each opportunity you have and put that growth on your resume. To Maintain long-term happiness, take advantage of the growth and move mentally or physically for better opportunities. Each experience increases your worth and knowledge. Remember this when it is time for a raise also. If you are not getting what you are worth from your purchases or earnings, it could be time to look elsewhere.
8. Create new income opportunities.
Sometimes, a new shovel is the only way to dig out of a hole. If you can work overtime or acquire a more lucrative position, do that. But remember, many people add more expenses as their salaries rise and never save or create the security a reserve account affords. We waste countless hours binging Netflix or complaining about our situation; however, getting a gig on the side hustle can put our expenses in balance much faster than savings alone. We can add to our education to gain extra income. We can use the skills and time to increase knowledge and to make more money. We can do many things to make extra cash without working ourselves to death.
9. Not just who you know.
It has been proven that proximity to people with similar interests increases happiness, smoking rates, and obesity, according to Framingham Study. The thirty-year study demonstrated you are created not only by your closest set of friends but also by their friends and family. Proximity may explain why sections of the country have a large percentage of success in tech, fitness, or even crime. Your life outcomes significantly change depending on who you are associated with regularly. Like a contagion, you can mirror the attitudes of your community. So, choose your friends with care. And I know we can’t choose our family, but you can decide how much time and influence they have on our lives.
10. Just you know
Decide what you want and create habits to secure that future. Deciding to tackle the stress in your life starts with healthy financial choices. Finally, determine what is most important to YOU and plan to achieve your best life.
Della Badart
AdultingToo.com
Make grown-up decisions to live your best life.