How to SaveMaking a BudgetPersonal Finance

How to Stop Living Paycheck to Paycheck

The first step when trying to stop living paycheck to paycheck is to set a budget. Setting a budget is not a difficult task, but it is an extremely important one and many people neglect it. Following a few simple steps can help a person set a legitimate budget and move from finance burdens to financial independence.

How to Set a Budget

Add up all of your bills and expenses. This is going to include everything from utility bills and rent to cell phone and grocery bills. Some of these will be static and will not change from month to month but others will change and, thus, will probably end up being something more akin to an average. These figures can be run using bank statements. Subtract the number from your monthly income and you will wind up with your monthly net income/expense.

This number can then be tested and modified while setting a budget. Excess expenses such as cable bills, fast food, and the like can be removed from the list or the amounts being spend can be lowered as a part of the budget. Ever wondered how to manage your finances or how to stick to a budget? The answer to these questions is: set a budget and exercise your willpower.

How to Start Saving Money

Starting to save money is the next step. Once a budget is set, there should be some extra room in the monthly income that is not being used up. Take that money and save it. Ta-da! It’s as easy as that. To avoid the temptation to spend the money, it may be easiest to set up another direct deposit for a percentage of your paycheck. This is the most simple and painless way to save.

Two things need to be kept in mind when trying to save. First: debt should be paid off before money is being saved. That money is not going to do anyone any good from a bank account if you have a whole bunch of debt that is draining your life away. Second: set up a three to six month emergency fund. This can be used in case a job is lost or if something catastrophic happens such as an engine going bad on a car or a water heater breaking. Only after these two things have been done should a person start legitimately saving money.

Simple Recommendations

Setting a good budget is the first recommendation. This step can, seriously, not be overlooked. It is the single most important step in the entire process of becoming financially independent. Set a budget and stick to it. Afterward, pay down as much debt as possible, start an emergency fund that will last from between three and six months, and get to saving. A little bit of patience and a willingness to forgo some of the finer things in life will lead to a nice financial buffer zone. These steps are the first ones to take in order to stop living paycheck to paycheck.

Admin

Owner and Publisher of FinancialFreedomNow.org, a website dedicated to providing readers with personal finance tips and information.