I’d love to, but I can’t afford it until my next paycheck. How many times have you said that in the past year? We all come up short from time to time on a big purchase or unexpected expense, but if you find yourself with empty pockets before the next check arrives every single pay period, it’s time to rethink how you’re spending your money.
Think you simply don’t have enough money coming in to stretch it any further? Breaking the paycheck-to-paycheck habit can be as simple as stacking up a number of smaller budget moves.
DO save before you spend. Nothing kills the buzz of a new purse or hot new car faster than having no grocery money at the end of the month. Save up for your wish list items, and then pay cash.
DON’T wait to start saving until you’re “a little more settled.” Set a savings goal you can live with right now, even if it’s only $5 a week (or $5 a paycheck or even $5 a month). Your money will grow, given time—it’s up to you to make that time begin today.
DO start an emergency fund. The recommended emergency buffer of six months’ worth of living expenses can seem like a huge financial hurdle far beyond your reach if you’re living paycheck to paycheck. Adjust your goals accordingly: Make the first benchmark for your emergency fund a single pay period.
DON’T dip into your emergency fund for vacations, down payments on a new car or other non-emergencies. An emergency fund is not a regular savings account; reserve it for actual emergencies.
DO follow a budget. If you don’t know how much money you need to live on each month, how can you evaluate whether or not you can afford any given expense or purchase? Get a budgeting app that makes creating and following a budget a cinch.
DON’T use credit cards to tide you over until the next paycheck unless you’re certain you can pay off the next statement and keep it at zero. Those purchases are rarely worth paying interest for.
DO make paying off debt your top priority. You will have more money to work with if you’re not dumping it into interest for things you’ve already bought. Use smart strategies for reducing credit card debt to get you back into fighting shape.
DON’T spend more than you make. It’s tempting to put something that’s “only” $25 on your credit card, but unless you pay your credit card bill completely every month, you’re only making it more difficult to pay your bills. Know how much money you have to work with and how much you owe during each pay period—and then stick to it.
DO take care of your health. A little preventive care goes a long way toward heading off health emergencies that take a huge bite out of your wallet.
DON’T bite off more than your wallet can chew. Avoid pouring your hard-earned money into more house or car than you need or can afford. The mansion and dream-mobile come later, not first!
DO consider paying with cash for everything. You’ll be less likely to part with green from your wallet than you will be to swipe your card one more time.
DON’T splurge on things over your budget because you “deserve” it. Nobody deserves to be saddled with debt. Be fair to yourself!
DO plan for irregular expenses. Keep a buffer somewhere for infrequent but predictable costs like birthday gifts, yearly membership fees, health checkups, teeth cleanings and so on. These shouldn’t have to come out of your emergency fund, because you know they’re inevitable.
DON’T keep making minimum payments on your debts. At 18% interest, making minimum payments on a credit card balance of just $5,000 could mean racking up more than $13,000 in interest over something like 40 years. Pay off debts by snowballing your payments.
DO wait until that dress or video game goes on sale before you buy it. Better yet, put it on a wish list and revisit the list in 30 days—chances are, your desire will have faded by then. Money saved!
DON’T keep paying for subscriptions and memberships you don’t use. Run a cost-benefit analysis and figure out if you’re actually using the product or service enough to make your payments worthwhile.
DO review progress toward financial goals every paycheck. Reminding yourself of your goals on a regular basis will help you keep your eye on the ball. Before long, you’ll find all your smart moves have begun paying off and you’re no longer scraping the bottom of the barrel before every payday.