In an improving economy, the lower class and the lower middle class are still living paycheck to paycheck. Numerous people are spending their paychecks far too fast. This can be from lack of discipline to unnecessarily high expenses, or having to take a lesser paying job after a layoff.
It’s a struggle for people. Usually bad with money is a short-term thing, but if not handled soon, it can turn into a long-term issue. The biggest concern is how to save more.
How to save more seems simple and a lot of people chalk up lack of savings to job hardships and needs outweighing their income.
Evaluate Your Financial Situation
Firstly, how to save more and stop spending paychecks too fast coincide. How can an individual save money if that individual is blowing the paycheck the instant it hits the bank or wallet? It’s nearly impossible.
Budgeting sounds easy, but putting it into practice is a struggle for numerous people. If that is the case, they need to pick up more income.
The way to approach the beginning is to assess spending habits. That is very crucial to begin the budget balancing.
First, an in-depth analysis must begin with spending habits. Receipts are a great way to track spending. Yes, if there is a lot of spending there will be a lot of receipts, but it is worth it.
After about a three-month period, it is time to assess. There is some serious review that goes into this quarterly assessment of spending habits. Spending habits vary from person to person. The best financial handlers are very dedicated to sticking to the premade budget despite the fleeting wants that tempt undisciplined money handlers.
Checking this out over a quarter really helps determine spending habits. It’s not one hundred percent accurate because there are always unexpected expenses, but it really gives insight into what will happen over the rest of the year.
Unnecessary expenses can range from simply eating out too much to just purchasing too many “luxury” items.
Necessities First
Paychecks are for necessities first. That is hard to grasp sometimes, but bills first, pleasure next.
If bills are too high, start cutting bills. Going out to eat is expensive. People like to enjoy the pleasure of eating out instead of having to cook, but when that is done frequently, it can really add up.
Alcohol is another very expensive one that really puts a dent in people’s budgets. Cutting out alcohol, or at the very least limiting the purchase frequency will help limit spending on unnecessary items. Also, cutting back alcohol will have good effects on health too.
TV, phone, Internet, streaming services can be the next items to consider cutting. TV and streaming services are less important than the other two and in fact phones are very close to necessary in today’s society, but are smartphones necessary. Some people work on their phone so that is one expense that is likely just there for a lot of people. The Internet is a real gray area. On one hand, a lot of people use it for work at home, the other hand most people use it for leisure purposes.
Water, electricity, car insurance, homeowners/renters insurance, mortgage/rent, food, and gas are essentials. Food from the grocery store is an essential, eating out isn’t.
Water, gas, electricity are not set prices and can be annoying to budget for, but the advantages here is the ability to control those in comparison to the standard bills.
Limit use of lights, water, and gas. It’s straightforward. Turn on lights only when necessary. Of course, early evening hours are going to be the worst for having to turn on lights because the evening is that small extension of the late afternoon where individuals still need light to do dinner and cleaning to end the day.
Gym memberships and clothes are a gray area. Gym memberships, while not essential, can be very good for people. Clothes are essential, but expensive and very nice clothes aren’t needed for every situation. Clothes are a regular expense for most people though so it’s nice to budget for clothing once per year.
Shopping tends to poke holes in budgets because discipline can be absent for a brief moment and can cost an individual.
Variable Expenses
When going to the grocery store know exactly which ingredients and items are needed. Individuals are able to stick to a list very easily, if something isn’t on the list and isn’t essential like water, bread, or milk, it shouldn’t be purchased. It helps to bring a calculator or to use a phone to keep a tally of the grocery price.
Spending a paycheck too fast can be a serious issue because sometimes it comes out of nowhere. There are always those irresistible sales.
Ignoring these deals that are being doled out by retailers is difficult. Retailers rely on customers not seeing the effects of spending money on these “great deals.” Many people justify the purchasing of items simply because they’re on sale. The most disciplined individuals can ask themselves if they need the item that seems so enticing and if it fits their budget. Most times it is not in the budget and should not be purchased for now.
Spending fasts have been known to get individuals on track when they are struggling to stay afloat. One month or more of spending money on nothing but essentials really analyzes if an individual is making enough money to pay for the necessities or not.
For people with a lot of money, they can pay for the services of a bank or financial professional to make sure they are only spending what is necessary and only splurging every once in a while. The people who are living check to check don’t have that luxury so they must practice self-discipline.
The best way to look at this is to think about what that money can be used for later. Cutting $25 from eating out every week saves $1,200 every year. It adds up. What else can that $1,200 be used for?
Budget, cutting expenses, and increasing revenue streams are critical to not spending a paycheck to fast and figuring out how to save more.