You say you have a budget but days before payday you still get nervous that you won’t have enough money to cover your bills.
If you have ever had that feeling you are not alone. 7 out of 10 families are living paycheck to paycheck, regardless of their income. Their money is going out the door as quickly as it comes in and half the time they don’t even know where it went.
So how do you break that nervous feeling you get before payday hits?
You have to make a plan for your money. Here are 4 steps to take when money is tight.
1. Prioritize Your Expenses
The only way you will know where your money is going is by making a zero-based budget each month. Zero-based budget simply means that your income less expenses equals zero. Every dollar is allocated to something.
A budget gives you a clear picture on what you are actually spending your money on. When creating your budget, you will want to start with necessities first. Before any other bills make sure you can allocate these 4 things:
- Food
- Utilities (water, electric, gas)
- Housing (rent, mortgage)
- Transportation (gas, car insurance, car payment)
Once you covered those 4 categories, then you can move on to other expenses in your budget. Some of those expenses might include debt payments.
2. Pay Only Minimum Balances on Debts
Pay the minimum balance on each debt to try to stay current. Student loan payments are a priority over credit card bills so that you don’t default. Remember, paying your credit card bill is not more important than paying for food, utilities, housing and transportation. If things are really tight, debt collectors can wait.
That is how a lot of people get into trouble. In efforts to keep debt collectors off their backs they are paying collections first but don’t have any money left to take care of themselves. It is important to pay off your debts but you have to take care of you and your family first.
Your goal should be to have enough money after your necessary expenses so that you can start paying off those debts and not stressed before your paycheck is deposited. This is where the next 2 steps come in.
3. Cut Out Extra Expenses
To give yourself some more wiggle room in your budget to cover expenses, start a savings or pay off debts, take a good look at all your expenses. Where can you cut back? When reviewing your expenses ask yourself, “is this a need or a want?” Some areas to consider are:
- Cable TV
- Subscriptions (Netflix, subscription boxes, ect.)
- Restaurants (it’s much cheaper to cook at home)
- Groceries (use coupons, only buy what you need, buy store brand items)
4. Making Extra Money
After you completed your budget with the 4 necessary living expenses, allocated for debt payments and looked for things to cut back on, there is one more step if you still need some extra cash. That is increasing your income.
Part Time Job
It may not sound that exiting at first but getting a part time job is the best option if you need to bring in more consistent income. Companies are always looking for part time work. You can also look for opportunities to help others in your area such as cleaning houses, doing yard work, or babysitting.
Sell Stuff
If your house is anything like mine it’s probably packed full of toys and your closet is stuffed to the brim. We are constantly adding things into our house, especially during birthdays and Christmas. But do you ever take the time to remove what you don’t use anymore?
Try selling some things you no longer need online. Facebook Marketplace and Craigslist are a great place to start to sell things locally. There are also some really neat apps available that make it easy to post and ship things. Some of these include Poshmark, Mercari and Decluttr.
Some things may not be worth your time to try to sell. You may also be surprised at what people would buy from you. I sold a Toby Keith cowboy hat on Poshmark and got $24! Extra bonus? It was one less thing in my closet!