4 Simple Ways to Feel Great About Your Money at the End of the Month
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Have you ever reached the end of the month with barely enough money left over? If so, you’re not alone. In fact, many Americans live paycheck-to-paycheck, and it can be one of the hardest cycles to break. Unfortunately, we probably know all too well what it feels like to have barely enough money or not enough money to pay our bills and allot money toward our financial goals at the end of each month; stress, frustration and even depression come to mind. But, what might be more motivating if you find yourself in this situation, is to think about what it feels like to have plenty of money left over at the end of each month.
Did you ever have the joyous experience of finding a $20 bill on the sidewalk, with no apparent owner in sight, other than you? How about that euphoria that washed over you when you received money for your birthday, Christmas or another holiday? Or, an unexpected bonus at work? Remember the way you felt at that moment.
Now, let it motivate you to spend your money in such a way that you get to enjoy that feeling every month.
It might seem hard, or even impossible, to take charge of your finances and ensure you have a solid savings account once and for all, but you can do it! Below are some tips on how to get there.
Know Your Budget
The biggest key to help you spend less than you earn is to know what exactly what you are earning and what you are spending. It sounds simple, but I know from my own experience that small purchases can go unnoticed until the end of the month.
Making a budget will keep you from spending more money than you earn, and it can also show you where you can cut back or make changes. You can use a free app like Personal Capital to help track your spending or you can use cash envelopes.
While apps can help you track your money, they usually show you your spending after it’s already happened. Using cash will help you spend less than you earn, because you can’t spend more than you have. Remember, even if you don’t use cash for everything, you can easily use it for a few categories, like groceries or incidentals.
Distinguish Wants vs Needs
If your initial budget shows you are spending more than you make, it’s time to cut back on your wants. The problem is that most people have a hard time distinguishing between wants and needs. For example, I might be in the market for a new laptop. I use Apple products so laptops are in the $1,000 range. However, I also have an iMac desktop computer.
Do I really need a new laptop when I have a desktop? The question is rhetorical but it just goes to show that even things I could convince myself I need for my business are really only wants.
So, if you find yourself spending a lot of money on your wants, take a long hard look at which ones you should keep. It’s important to look at big ticket items too like cars. My husband and I shared a car for a few years, and while it wouldn’t work well now that we have two kids, I do acknowledge that owning two cars is definitely a luxury.
Create An Emergency Fund
Part of what makes people live paycheck-to-paycheck is that they have a hard time saving. After all, when you’re an adult, things come up. There are cars to fix, dishwashers that need repairing and trips to the ER that happen unexpectedly. Because of this, it’s important to have an emergency fund.
By creating an emergency fund, you will be prepared for the unexpected. The idea of building up an emergency fund can seem so daunting that many just don’t start. Don’t give in to that feeling! The most important thing you can do is to just start, even if it’s small, it matters. High-yield savings accounts at banks like Ally and Barclay Savings make it easy by letting you start with no minimum balance.
If you don’t think you have anything to set aside now into those no minimum balance savings accounts, sell something. Then, deposit your earnings into your new savings account. I once made $300 in one morning from a garage sale by selling what I considered mostly junk.
So, if you need money to stash away, look around your house for things to list online. It could be the fastest way to get the savings you need to finally break the cycle.
Pay Off Debt
If debt is making it hard for you to save money or spend less than you earn, it’s time to get intense and pay it off. Paying off debt may take time, but a great way to do it is by taking on additional work. Even people who have full-time jobs can side hustle their way into paying off their debt – in fact, here are 24 ways to earn extra money to pay off debt to give you some ideas.
Even though it’s hard and could take a significant amount of time to work on the side and save, freeing up a few hundred dollars in your budget each month will make a huge difference in allowing you to build a substantial savings and stop living paycheck-to-paycheck.
Ultimately, it may be hard to start spending less than you earn every month, but by using some of the tips above, it is absolutely possible.
Are you living paycheck-to-paycheck or have you ever? What are some other ways to spend less than you make? How do you keep track of your spending to make sure you’re on track with your budget each month?