Good financial advice stresses setting aside part of your pay cheque for savings and debt payments, but for many – especially young Canadians – financial habits just don’t allow for this kind of forward planning. As a result they live pay cheque to pay cheque. Living this way certainly makes life feel a little hopeless – and can leave you vulnerable should a financial emergency arise. Here are nine tips for kicking the vicious cycle to the curb and getting ahead:
Keep Track Of spending For An Entire Month
In order to get a better idea of where your money goes, you’ll want to keep track of every penny you spend. From your monthly bills to your daily coffee, a pack of gum, or that fancy dinner on a Friday night, keep track of absolutely every penny you spend.
Separate Needs From Wants
Take a closer look at the list you’ve made. Which items are necessary bills? Which ones aren’t? Having a better handle on your needs and wants will help determine how much you need to set aside for bills, as well as how much you can spare for the other things.
Count Only your Guaranteed Income
When determining their monthly income, some people account for inheritances and other uncertain money. That kind of thinking can lead to overspending – or under-spending on the important stuff. When determining how much money you have available for bills, only count the money you know is coming in.
Pay Off Debt Before Starting Savings
I realize this goes against what most personal finance experts will tell you, but hear me out on this one. First of all, the interest you pay on the debts you owe is higher than the interest you’ll make on your savings. Some people believe that if you don’t start saving now then you’ll never start. I believe the opposite. As you start paying down your debt, you’ll get a sense of the freedom that comes will financial security – and it’ll inspire you to set more aside as you’re ready.
Pay Your Bills As They Come In
Paying your bills off as they come in will keep you from overspending. If you don’t have the money, you can’t spend it, can you? What I do is pay off each bill – even if only part of it – as soon as it comes in. What’s left can go to personal use. Plus, you’ll feel better spending that leftover cash when you know you’re caught up on your bills.
Budget For Fun
You know the saying… “All work and no play makes for…” Well, all bills and no fun makes for one unhappy worker. Set aside money you can spend on something fun, otherwise you’ll reach the point of depression and spend frivolously in order to make yourself feel better.
Whenever possible, shop wisely. Buy in bulk, buy on sale and purchase only what you need. Ask if there’s a sale coming up, look for deals online and stay away from name brands. Finally, always, always take a list – and stick to it. I promise, if you heed this advice, you’ll cut out an incredible amount of unnecessary spending.
Plan For The Day Ahead
Rather than buying that daily newspaper, why not try reading it for free online? Instead of stopping at the local coffee shop, take a coffee from home. Fill up a refillable water bottle and cut back on the cost of purchasing bottles on the fly. Take a lunch instead of eating out. To cut back on gas consumption, consider taking the bus or walking, if possible.
Consider a Second Job
At least until you have a handle on your debt, consider picking up a second job. There are plenty of neat ways to supplement your income. Some people do online surveys, while others sell products (think Tupperware and make-up parties) to friends. Even one shift per week as a server or bartender will bring in a little extra money – at least until things are under control.
There’s no doubt; living pay cheque to pay cheque is no one’s idea of a good time. In fact, it’s downright stressful. There’s nothing worse than wondering whether or not the gas in your tank will last until the end of the week. The only solution to living this way is to get on top of it. Make a plan and stick with it. Trust me, you’ll be glad when you do.