Are you struggling to keep up with timely payment of your monthly bills? Do you find it difficult saving money for your retirement? Are living paycheck to paycheck? If your answer to any or all of the above questions is yes, don’t be dismayed. Most people are facing this same problem, but you don’t have to be in this state any longer. With due diligence and some work, you can create some space in your budget to help you save more money without missing out on life.
If you’re willing to put in the work, here’s how you can begin working breaking the vicious cycle of living paycheck to paycheck.
Change the way you think about money – The first and most important step to take in changing your thought process about money is to take a long and hard look at your relationship with money. Do you engage in impulsive buying? Do you spend money as soon as you get it? A ‘yes’ or ‘no’ answer isn’t necessarily right or wrong. The most important thing is to learn about yourself and find out the areas where you fall short. This will help you reevaluate your thoughts about money.
Know exactly what your financial picture looks like – One easy way to do this is to create a personalized cash flow statement. Aggregate your bills and write down your sources of income so that you can see exactly how much cash is coming in and where it’s coming in from. If you find it uneasy looking at your finances, that’s more of a reason why you should perform this exercise. The goal is to be comfortable reviewing your finances because you know that you’ve taken steps to make sure your finances look good.
Once you have a clear idea of what your financial picture looks like, you’ve taken a significant step towards getting to the point where you always have extra money in the bank at the end of every month.
Create a budget – All the points listed above will be null if you do not create a budget. It doesn’t really whether you choose to use a personal budgeting app like mExpense or do it the old-fashioned way with a pen and paper. What matters most is that you use a method that works for you.
Creating a budget that includes all your sources of income, variable and fixed expenses may take a couple of hours initially. But once you get used to setting realistic budgets for different categories of expenses, you’ll only need to make little tweaks monthly to achieve your goals.
Put your budget into action – every penny in your budget should have a job. This means that even before you get your paycheck, you should designate where every penny will go to. This will take the uncertainty out of budgeting and make it easier for you to track your expenses.
Eventually, you will attain your financial goals and make the best out of your income – and what looked like a struggle from paycheck to paycheck will slowly but steadily lead to financial freedom. It all begins with getting started in the first month and then steadily growing your savings from there.