78% of workers in America claim to live paycheck to paycheck. No, the answer isn’t to make more money. 1 in 10 workers making $100,000+ every year, still live paycheck to paycheck. The answer is to be smarter with your money.
1. Track spending and create a budget. Yes, I always start here. I believe that a budget means freedom. If you create a budget that works well for you, you don’t restricted in your budget. But, you do learn to live within your means.
2. Save money the day your paycheck comes. If you use online banking, you can use automatic transfers to move money the day you get paid. Start moving a little money into a savings account right now. It can be $5-10 every time you get paid, but it still adds up. If you don’t have online transfers available, set some money aside from each paycheck.
3. Break monthly expenses into chunks. If your house payment is $1,000 and you receive two paychecks every month, set aside $500 from each. Don’t wait and take all the money for a big expense out of one paycheck. This is one of my favorite tricks which I will talk about the many ways it can help you pay down your debt.
4. Change your attitude. You can pretend to earn less than you do. Cut back on a few expenses every month. If you really like to go out, you still can. But, look at your expenses and adjust them to just save a little.
5. Change paycheck withholdings to get a smaller refund. If you had less withheld from each check, you could be saving or paying down debt quicker. The IRS doesn’t mind holding your money but they don’t give you any interest. If you receive a $4,000 refund, you are paying the IRS an extra $333 every month that you don’t need to pay. If you lowered your withholdings and paid an extra $333 every month on your debt, you would save about $200 in interest for the year on a 10% interest loan. Plus, you don’t have the worry of living paycheck to paycheck. I know you like the big refund but wouldn’t you also like to have an extra $300 a month to pay yourself.
Big Refund? See my ideas of how to spend it.
Living paycheck to paycheck is stressful. Don’t continue to get caught in that cycle. Start with small things to move into financial freedom. Contact me for a free budgeting consultation.
Note: If you always pay the IRS, start 2019 with a small savings account to pay that bill when it comes due. The IRS interest and penalties when you don’t pay your bill by April 15th is very high. You can set up an appointment with me to discuss how much interest and penalties you are paying by not paying your tax bill by April 15th every year.
E3 Accounting Solutions, LLC 