This is a guest post by Jon Dulin from Money Smart Guides.
There is a saying that goes around that seems to be more common among our households these days:
There is more month at the end of the money.
A survey of households revealed that about one in three aren’t able to save money each month, which means they are living paycheck to paycheck. And no, that is not only those who are considered poor. That statistic includes a fair number of middle-class households.
Think about that, if not you, then one of your neighbors living on either side of you is having trouble making ends meet, or they are barely doing so. Does it concern you that your household is not able to put away any money in savings or toward vacation or retirement, because you need every dollar that the government doesn’t confiscate in order to live your life?
Maybe it’s time to take a realistic look at that life. Maybe just by having enough to cover your expenses means you are living beyond your means. And if you do take that step back, what do you do about it? First, let’s get into analyzing the situation you’re in, and then we can come up with some suggestions about how to change or fix the problem.
Conquering Living Paycheck To Paycheck
Face the Music, Buddy!
If you are finally frustrated with how your money situation is going (or not going), it might be time to get out some paper and start writing down the harsh reality of your life. This means writing down your expenses each month in as many general categories as you can (food, clothing, transportation, housing, utilities, recreation, miscellaneous, etc.). If you can, use an average of the last three or four months to give you an idea.
After you do that, put down how much take-home pay you have had over those same three or four months, and average it.
Is the expense total less than the income? Is it at least 10 percent lower? Or is it higher, by any amount?
Then yes, we can confirm that you are living paycheck to paycheck. So now what? Well, we likely can give you some of the same advice you have heard other places, about cutting expenses and adding income, but we’d like to take this to a different level and come up with some specific tactics that can help with the overall strategy.
Once you have this listed out in all its painful glory, it will be time to start setting a preliminary budget ahead of time so you can actually start telling your money where to go before you wonder where it went. During this time, you can look at some of the suggestions for squaring up your budget better so you can balance it both by cutting spending and adding some income.
Find The Fat
Consider that paper that has your expenses listed. Find some ways to cut back on some of those expenses. The goal here is not just to get expenses to be less than income, but to find about 10 percent less money than you could use to save or pay off debt. There are probably even ways to cut back on the essentials like utilities and food, not to mention transportation. For example:
Unplug appliances you don’t use. If you only do laundry on the weekends, unplug your washer and dryer during the week. There is “phantom energy” that escapes out of your plugs that costs you money.
Buy generic. Store-brand food and merchandise can often be much cheaper than brand name items, even if brands have coupons.
Cancel cable. Stream Netflix and Amazon Prime instead of going to movies.
Run several errands at a time, traveling a loop. One trip instead of several saves gas and time, and wear and tear on the vehicle.
Pay cash whenever possible. We tend to spend less when we use actual cash than simply swiping our credit or debit card (hopefully only debit card). Cash has an emotional trigger to it, and it’s harder for us to part with actual cash than digits on a computer screen.
Get money back. Here’s an idea. Check out a smartphone app called iBotta. There, you can get money back on everyday purchases made at major supermarkets or national chain stores (such as Trader Joe’s, Safeway, Albertsons and even Costco). This essentially gives you savings (like coupons) after the fact, but the money can go toward your food budget.
Ride the bus or carpool to work a couple times a week. The less wear and tear you put on your car, the more money you will save.
Cut a habit. If you drink wine or beer regularly, or you smoke, you can save money by cutting back. Exchange wine or beer for soda or flavored water, and cut your cigarette use in half (if not eliminate it altogether). Those save you money and will actually improve your health, which will save you more money in the long term.
Shop auto insurance. Premiums can go up simply by loyalty. Companies don’t think you’ll leave. Being aggressive every year in shopping for better insurance deals could save you $50-$100 per month if you have a good driving record. This only needs to take 10-15 minutes of shopping online insurance comparison sites.
Ask to waive fees. Any bill that has a fee on it, you can at least ask nicely for the company to waive it or give you a lower rate. I filled out a customer survey with my Internet provider and made a comment about the price was spiking up over the last 12 months, and I had my rate restored to the same one from a year ago, which saved my family $10 a month. (Yes, this did happen.)
Shop credit cards. If you have a credit-card balance, there are many companies that offer no-fee balance transfers and lower interest rates. While I certainly don’t want you to have debt at all, if you do have it, it is worth the few minutes to shop around.
Build The Muscle
While it may seem tough to cut spending when balancing a household budget, it is actually easier to find areas to cut spending than it is to find more income.
When you are already putting forth a lot of hours working, and you really want that work-life balance, you will certainly be reluctant to add income with another job, but here are some suggestions of ways to get more money into your home.
Yard/garage sale. Or sell online through Craigslist or eBay.
Donate blood or plasma. As long as you are OK with needles, you can get a few bucks by donating once a week.
Be a digital guinea pig. You can check out sites like Smart Panel, where you can get paid for having the app on your device and feed it data about how you use the device (works for PCs, tablets, smartphones, music players, smart TVs, e-readers).
If you keep the app on your device, you will be paid a few bucks a month. That’s $75 (or more) during the first year.
You can also fill out surveys through such sites as Swagbucks or Ipsos Panel, where you can get paid for completing online surveys or watching a variety of videos. Combined, those could produce $30-$40 a month (around $400-$450 per year) in extra income just during your few minutes of down time!
Data entry, or do a little writing. If you have an interest or a skill that you don’t use enough at work, you could check out freelancing marketplaces like Upwork or Freelancer, where people can do data entry, accounting, website design, digital marketing, software development, or writing from home a few hours a week. You control how much you work and what you get paid by clients. You could turn it into a side business evenings and weekends.
Deliver pizzas. Having three of four evening shifts per week, including a Friday and/or Saturday night (or at the same time as a key sporting event like the World Series, Super Bowl or the Olympics) can make you $100 a week just in tips.
Walk neighbor dogs or do some babysitting.
Run errands for infirmed or elderly. Or do their yard work.
Reversing The Saying
Many of these suggestions don’t have to be permanent, but if you enjoy saving the money or making more income, you can certainly choose to keep them as part of your new life. The mission there though is to reverse the saying mentioned earlier in this article. We are here to help you have more money at the end of the month, instead of more month at the end of the money.
Every little way you can stretch your paychecks, whether by cutting expenses or increasing income (or both), the more money you will have to save or to use to get out of debt.
Let’s get more money out of our months, shall we?
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Jon writes for Money Smart Guides, a personal finance blog that helps people get out of debt and start investing for their future.