You’ve just gotten your paycheck and you’re excited, since you’ve been broke for the last two weeks while waiting on it to come in. You quickly pay your bills and make evening plans, running by your favorite shop to grab a new book, video game and some of your favorite hobby supplies. You go out with your pals and get a fancy dinner and a bunch of drinks and have an altogether great time.
Then, the day after payday, you’re dead broke again. How did this happen? You double-check your bank statement and see you blew through all of your spending money the night you got it. You chastise yourself and promise to not do this again, but you know, deep down, this cycle will continue forever. Unless, that is, you do something about it.
Make a Budget
Think critically about your money. Bust open your financial books and take a look at your income and spending. Try to figure out where your money is going before you even get it in your account. You’ll know that your bills need to be deducted before you even start thinking about what you’re actually doing with the money.
Things like power, water, mortgage/rent, phone bill and internet bill are pretty much non-negotiable. You have to live somewhere, you need a phone and you definitely need internet. Set aside some money you plan to spend on groceries and on food. Beyond that, you can categorize your money in two ways: money you want to spend, and money you want to save.
Saving vs Spending
If you’re finding your money gets tight before you even get done with your bills, you need to strongly consider changing your lifestyle. Is your phone bill too expensive for your income? Maybe your apartment or house is too pricey, and it’s time to move? Consider whether your current job is actually paying you enough. These considerations are vital for crafting a functional budget.
Once you’ve paid your bills, you need to think about how much money you want to be saving. As a rule of thumb, it’s a good idea to save thirty percent of the money you have left over after you get done with your bills. The remaining seventy percent can be your spending money for that paycheck. Leave your savings alone: only tap into that for emergencies. Just use your spending money to cover your expenses between now and your next check. This should help you to keep a better eye on your spending!