The term “living paycheck to paycheck” typically alludes to a lack of money. While this may often be the case, for some in that situation, the real issue is a lack of discipline with money. It doesn’t matter if you make $30,000 or $300,000, if you have no control over your spending, you’re bound to wind up in the same financial boat.
Change Your Mindset
We’ve all been guilty of talking ourselves into purchases. The new self-care movement is not an excuse to splurge on everything you feel the urge you to treat yourself to. It’s easy to think, “I deserve it,” or “I’ve had a long day, and this will make it better.” Instead, realize that you work hard for your money and you shouldn’t throw it away on something that’ll only give you temporary gratification. There’s nothing wrong with rewarding yourself, or the occasional pick-me-up purchase, but it can get out of hand. Find a healthier way to deal with the stress of a difficult day, such as going to the gym or reading a book to take your mind off things. Also, just because something is on sale, it doesn’t mean you have to buy it. If you weren’t planning on picking it up before, don’t do it now. This kind of mindset will sabotage your finances. Fortunately, it is possible to develop a new outlook and train yourself to avoid impulsive spending.
Eliminating Unnecessary Expenses
Identify the materialistic things you already have that aren’t adding value to your life, then sell or just get rid of them. If something doesn’t have a purpose and simply takes up space, you probably won’t miss it. Clearing away clutter simplifies your environment, and your mind. Once you have a clean slate, you can focus on changing your habits and making better financial decisions. Then start eliminating unnecessary spending. Categorize your past monthly expenses into need, want, and like. Use this to determine your priorities and cut out whatever you can. Consider skipping out on your daily latte and making a homecooked meal instead of eating out. If you have cable TV, switch to Netflix or a similar service. This may seem minor, but it all adds up.
Once you’ve eliminated unneeded expenses, start budgeting per month. Write down every expense: food, housing, pets, a car wash – anything that comes out of your account. This will make you aware of how much you’re spending, and on what. Once you have an idea, you can start setting aside certain amounts for each expense. While constructing a budget, be realistic. Spending $50 a month on groceries may not be possible. Don’t set yourself up for failure. It’s also important to leave some “fun” money for recreational things like shopping and going out with friends. This will prevent you from feeling deprived, which often leads to more spending. Then, follow through with the plan. Maintain a spending journal and list your income and expenses. At the end of the month, compare your budget to what you actually spent. If both are similar, you’re on the right track.
Credit Recovery Programs
If you’re having trouble keeping up your budget yourself, you may want to talk to a credit counsellor or look into a credit counselling agency and resources like Debt.ca. Such agencies offer one-on-one counselling, debt management plans and seminars on how to make and stick to a budget. A debt-management program is typically a written agreement between you and the lender, with the help of the agency. Your debts are consolidated into one affordable monthly payment. As well, creditors usually reduce or eliminate interest charges for people on debt-management programs. If you do want to seek professional help, do your research on the agency or counsellor in advance to make sure they’re reputable and certified.
There’s no running from budgeting. Track every penny you spend, cut off unnecessary expenses, develop a budget, and stick to it. Set reasonable goals and stay consistent, and learn to use the resources you already have. It’s easier said than done, but once your efforts come to fruition, the freedom will be worth it.
Helen Jacob | The Edge Blog