How many times have you had to borrow money from friends or family just to buy food or pay bills? For many people in the world, getting paid and going broke all occurs on the same day. Honestly, there are many reasons people find themselves in that situation, however, the biggest reason is that they are not aware of how to control their finances.
Living paycheck to paycheck is a lifestyle that affects a variety of people. Regardless of whether you get paid every week, twice a month or once a month, having your finances in order can reduce stress and prepare you for a better financial future.
Getting Real About Finances…
When I got my first job in high school, I would spend the money on food, clothes, parties, and at the mall while hanging out with my friends. I never thought about saving the money that I earned and that mindset followed me through my early college years. After I got married, I realized that the money habits that I have lived with all these years were not going to create the lifestyle that I wanted my husband and me to have.
That’s when I began to focus my efforts on changing our financial future.
I quit looking for quick fixes, empty promises, and extreme tactics to save money here and there. Instead, I looked at what we both could implement and live with, without feeling like we were obsessing over the price difference of canned beans vs dried beans.
If you are interested in taking the first step in making better financial decisions, listed below are simple tips that we have used and continue to use in order to gain control of our finances. Keep in mind that there are no shortcuts involved, only patience and discipline.
Disclaimer: I am not a personal finance expert. The information shared here should not be seen as professional advice. You should consult a financial professional before making any financial decisions.
Tip #1 – Analyze Your Current Situation
Before you can begin to understand the areas you need to improve, you need to sit down and analyze your current situation. Start by going through the last 30 days and making note of where and what you spent money on. This will help you get a clear understanding of where the money you earn is actually going. Embarrassing enough, we found that most of our money went on food – not groceries, but eating out.
Tip #2 – Save For An Emergency Fund
An emergency fund is a beneficial fund to have, regardless of whether you earn $800 a month or $5,000 a month. An emergency fund is an amount of money – usually, $1,000 – that is used only when unexpected things happen in life that would possibly cause you to get more debt. When you think of emergency fund, think of car repairs or medical issues. Depending on your situation or comfort level, you may want to save more than the minimum $1,000.
Tip #3 – Reduce Your Expenses
The amount of money you earn and the amount of money you spend go hand in hand. Reducing expenses is important because the more you can reduce, the more money that will be able to stay in your wallet. Simple ways to reduce expenses can be achieved by basic swaps. For example, switch cable for Netflix, contract cell phone for a cheaper prepaid plan, or move from your current housing situation to a cheaper housing situation.
Tip #4 – Are You Eating Your Money
When we first went back 30 days to see where our money went, you wouldn’t believe what we found! We were spending $600 eating out every month. We did not realize eating out had that kind of impact on our money. That’s why it is important to have a clear picture of how much of your money you’re eating. It could be spent on groceries, restaurants or drinks; doesn’t really matter. You can save the most money by cooking cheap meals so that you won’t be eating all your paycheck.
Tip #5 – Create A Budget
A budget does not have to be complicated in order to work. Many people get wrapped up and try to make it harder than it is. It’s important to understand that when creating a budget, you need to set a spending amount and stick to it. I like to use the budget outlined in the Total Money Makeover and the Every Dollar app on my smartphone as well.
Related: 4 Basic Steps To A Simple Budget
Tip #6 – Use Cash
There is a strong feeling that you get when you see and feel your money physically leave your hand. You get that feeling because you just spent your hard-earned money! I know that’s obvious, but how many times have you swiped your card to the point of it getting declined. You probably had not realized that you had spent all your money. If you want to have better control of the money that’s coming in, then it is a good idea to use cash instead of a debit card. You can purchase a cash envelope system here.
Tip #7 – Be Consistent
Trying to create better spending and budgeting habits is a hard road to walk. A successful tactic of those who see results and constantly improve their financial future is consistency. Everything does not go as smoothly as planned, and if you have heard of Dave Ramsey, then you know that Murphy will show up – it’s just a matter of when. Discipline and consistency will pay off over time.
Tip #8 – Take Savings Off The Top
One final tip for the budgeters who like to streamline as much as possible (me!). If you know how much you would like to save every month, then have that amount automatically taken from your account and put in a different account. You will be forced to budget and live with what gets put in your main account every month and you will be adding to your savings without realizing it.
I hope that these 8 tips on how to gain control of your finances for good were helpful to you!
Do you have any money tips that you use? Let me know in the comments!