How to budget and save money?
Are you one of those people who is constantly trying to make money stretch until their next paycheck? If you’re someone who lives paycheck to paycheck, it can be stressful and overwhelming trying to make ends meet. You may not have a savings account or emergency fund and scraping up money to cover a flat tire or unexpected bill can be impossible.
If you want to stop living paycheck to paycheck, it can be done. Following the tips below can help you stop overspending, get out of debt, and save money.
Track Your Spending
To get a better idea of where your money is going every week, track your spending. During your pay period, carefully track every transaction you make. Once the period is over, you’ll have a better idea of where your money is going. Plus, you’ll see where you’ve been overspending and where you can cut back.
Create and Stick to a Budget
Writing down and sticking to a budget are two different things. When you create a budget, you’ll want to account for all of your monthly expenses. This includes expenses like renewing your car registration or paying your taxes. Accounting for all your expenses will ensure you’re prepared to pay them and not surprised when they’re due.
Once you’ve created a budget, stick to it. Don’t deviate from your allotted funds. Once your budget for groceries, entertainment, or other discretionary items has run out, stop spending. Sticking to your budget is the fastest way to get out of debt and build up your bank account.
Set Money Aside First
One of the best habits you can get into when you decide to stop living paycheck to paycheck with no savings is to get in the habit of saving first. Planning to save whatever you have leftover from your paycheck after you’ve paid bills will rarely build up your bank account. It’s easy to spend funds when you know they’re there.
Instead, with every paycheck, put a certain amount in the bank as soon as you get paid. It’s recommended to put between 10-20 percent of each paycheck into the bank. It’s easy to set up an automatic transfer with your bank to take a certain amount of your check from your checking account to your savings. This way you’re not tempted.
Get Out of Debt
If you have debt, saving money is next to impossible. One of the easiest ways to get out of debt is to stop using your credit cards. Even if the rewards on your credit cards are great, stop using them. Paying off your credit cards or other debts eats up a portion of your paycheck and can prevent you from saving money. Plus, refraining from using your credit cards will help you better control your spending.
One of the easiest ways to stop living paycheck to paycheck is to take a good hard look at your fixed expenses and discretionary spending to figure out where you can cut back. Try to challenge yourself to spend less money at the grocery store or at restaurants each week. It’s easier and more manageable if you try to cut back a little bit at a time instead of all at once.
When you go over your fixed expenses, like rent, car payments, or insurance, you may find you’ve set yourself up in a lifestyle you can’t afford. If you’re spending too much on rent, or have an expensive car, consider downsizing to something more affordable.
Find Your Purpose
To stop living paycheck to paycheck, you have to break the cycle. But you need a good reason to break this cycle and build better habits. What are you saving for? Buying your dream home? Finally paying off your car? Figuring out the purpose behind building up your bank account will help you stick to the budget and rules you’ve set for yourself.
Remember to be patient with yourself, too. Making these changes doesn’t come easily, but it is possible if you remain consistent and be patient with yourself as you strive to make these changes.
Become Financially Stable
If you’re done living paycheck to paycheck with no savings and want to get out of debt, get in touch with CreditAnswers. We’ll provide you with a free debt assessment to help you figure out where you can cut back on spending and take the first step to becoming debt-free.