While it may be a common practice to live paycheck to paycheck, that doesn’t mean that it should be accepted. In the age where cash continues to fade away and swiping is the norm, it can be easy to rack up debt with no end in sight. By making a few adjustments you can improve your finances, and most importantly, avoid going broke that can set you back not only now, but sacrificing your future when you are finally ready to walk away from work and will need every dollar.
Build an Emergency Fund
A monthly budget can quickly be erased if a major purchase comes up, such as an auto repair or a much-needed upgrade to your home. Instead of putting on a credit card and adding an additional monthly payment, if you can eventually save up a few months’ worth of reserves in an account you can access, you can give yourself a nice financial cushion if there unexpected were to occur. While you may be thinking where you’re going to be able to find extra money to save when it’s already tight, but you’re just going to have to get your priorities straight.
Track Every Purchase
If you were asked how much your monthly expenses are, or even how much you spend on gas, food, or entertainment throughout the month, would you be able to answer even within a few hundred of the exact amounts? Chances are you will not be able to and spending is sort of a free for all throughout the month. Even if you stop where the amount coming in meets what going out, at least you’re not going into debt, but you’re also not getting ahead either. If you can pull last month’s debit and credit card statement and actually go line by line, you can start to examine what purchases were necessary and which could have been, well, avoided.
Make the Necessary Cuts
While it’s nice to be able to get every meal out and avoid the cooking and cleaning, those costs skyrocket compared to what you’d spend at the grocery store and preparing each meal at home. By limiting to even going out once a week, you’d save hundreds per month. Going even further and cutting expenses such as the gym membership you don’t use or the cable bill that you only stream anyways, you can start to open up plenty of extra money in no time.
Pay Yourself with Free Money
Using a credit card for all purchases might scare some, but if you’re able to use responsibly and payoff what you can afford, you can earn points or cashback on the purchases you would make anyways. Depending how much you spend of course this could add up in hundreds of free dollars every year. At work, be sure that you contribute the max to what your employer with match on your 401k, as if you’re not, it could be not only thousands of dollars per years, but tens of thousands over the life of your career there.