The thought of budgeting can be stressful. Especially when what you earn is not lasting until the next payday, the idea of tracking your money can be overwhelming.
However, there are ways to make your money last no matter how much (or how little) you make. The most important part of budgeting is understanding your basic income and expenses. Having a clear picture of what is coming in and what is going out is enough information to make some changes to how you divide your earnings among your wants and needs.
If you’re struggling to make ends meet and want to know the best ways to stretch your paycheck, keep reading for some helpful tips.
Tip #1: Get Serious about Budgeting
A quick way to get a handle on your money is budgeting. While it may seem daunting at first, creating a budget mainly consists of comparing your income to your expenses. Many people mindlessly spend and wonder why they seem to never have extra cash to save or do other things. Analyzing your income-to-expense ratio will allow you to break down all of the other things you pay discover more ways to save.
Start by looking at your bank statements or an overview of your transactions. These are available on your bank’s internet banking site or mobile app. Examining bank and credit card statements will help you see what you have been spending and where you may be losing money on recurring subscriptions and other purchases that are deemed non-essential.
Many commercial banks provide transaction alerts to let you know when your bank balance dip below a certain balance. Some break things down by category, letting you know exactly how much you spend on coffee each month, for example.
Tip #2: Negotiate Your Bills
Another way to decrease your monthly bills is to negotiate. Depending how long you’ve been a customer, many companies are willing to compromise to keep your business. By placing a call to your cable company, for instance, you can more than likely get a discounted rate for being a loyal customer.
Sometimes, you can negotiate a better rate without having to contact the company. For example, if you subscribed to free trial for a streaming service and canceled once the trial period ended, after some time has passed you may receive an email offer with a lower rate as an incentive to subscribe again.
After identifying which services and bills you need, you’ll have a list of essentials. Then, you can start negotiating to see how much more you can save each month. A phone bill is one of the easiest things to cut. Since many phone companies offer great deals at lower rates, that’s usually the easiest bills to get reduced.
Tip #3: Replace Expensive Habits with Low or No-Cost Alternatives
Contrary to advice from some financial professionals, you don’t have to give up everything you love to save money. There are always less expensive or free alternatives to your favorite activities. The overarching point is to not deprive yourself. That can be a major cause of financial difficulties and foster an unhealthy relationship with money.
When you create a budget that is tailored to your specific situation, you’ll be able to prioritize some of the things you like. For example, instead of attending four concerts a year, you can start small and cut it down to two. If you enjoy outdoor activities, take time to research free or low-cost outdoor events planned in your city.
Another common source of financial drain is dining out too often. Instead of going out to eat all the time, allow yourself one or two dine out meals per month. You may also choose not to drink alcoholic beverages, or to order an appetizer instead of an entrée, or to go to happy hour when things are less expensive. This allows you to still enjoy the experience without breaking the bank.
Tip #4: Resist the Urge to Splurge
Splurging can be very tempting when you don’t have a good budgeting system. However, there are ways to reduce your spending when you go shopping either online or in person. It is easy to go over budget in your favorite store if you aren’t careful.
If you give yourself a limit before you shop, it creates a level of accountability. This means you are likely to put more thought into what you purchase. Shopping in person with cash is an easy way to accomplish this, because you are limited by how much you brought with you.
When you spend less, you’ll have more money for things like savings accounts and emergency funds. When people are living paycheck to paycheck, it sometimes seems impossible to put money into savings. Fortunately, with the right habits, you’ll be able to grow a savings account even if you don’t have a high income at your disposal. You can get closer to where you want to be financially by making small changes.
Tip #5: Start Where You Are
No matter what your financial situation is, it’s possible to change how you manage your money. When you foster good habits early on, it is easier to get through hard times. Additionally, you can pass on your tips to your friends and family by setting a positive example.