There’s a stigma around living paycheck to paycheck. A lot of people are in this rut where they run out of money before payday and they have to suffer for a few days until the next check.
This, of course, is not ideal because it gives you no freedom. You are strapped for cash. Any emergency like a death in the family or the car breaking down will put more stress on you.
Calling off work is not an option. If you do get time off, you can’t go anywhere nice and relax.
Money is super tight and it fucking sucks.
However, I found that budgeting around paydays instead of budgeting monthly has let me get ahead financially.
Focusing on just two weeks at a time is easier than having to plan for a whole month. Budgeting at the beginning of the month, you are assuming what your income will be.
Budgeting paycheck to paycheck, you know exactly how much money was received because it’s already in the bank.
This gives me the advantage to pay my bills AND myself. And paying yourself is what is going to get you ahead.
How to Get Ahead By Living Paycheck to Paycheck
Lower Your Expenses
Of course, the first thing you must do to get ahead financially is to lower your expenses. You will never get ahead if you’re using up every cent of what you make.
Everyone has something they are paying for that isn’t a necessity. TV subscriptions, magazine subscriptions, cable, expensive phone bills, etc.
Are you subscribed to Netflix and Hulu on top of your cable service? Get rid of two of them.
Are you signed up for magazines and newspapers? Why? You get free news and gossip on the internet.
Consider switching phone bills to get a better deal. I use Visible.com. They have great service and if you have a family plan, you can get 4 lines for $100 a month. Such a good deal!
And if you need help lowering the bills you have, consider contacting Billfixers. They will negotiate for you!
This step is crucial. You have to free up money in order to reach your financial goals. If you cannot save anymore, you need to start bringing in more money.
Budget Necessity Bills
Your necessity bills are what you and your family need in order to survive. These are not a set amount, but your job is to set an amount for them.
These bills include food, household items like toilet paper, medical needs, pet needs and gas.
Set a budget for each of these. For food, it is suggested to set the budget at $100 per person per month.
So that would be $50 a paycheck times the number of people in your household. I go by this number. However, you may need to adjust if you live in an expensive area or if you have a special diet such as a gluten-free diet.
Use the suggestion as a baseline. You may see that you have been overpaying for food for a long time.
The other categories depend on your needs. I budget $150 for gas every month. Look through your bank statements and see what you usually spend and make it a whole number to go by each month.
Then split it in two for paycheck purposes. Each paycheck, I budget $75 for gas.
Map Out All Bills
Get a calendar. I like Google Calendar. Insert all of your bills into the calendar and set them to reoccur every month. It helps to also add the price to the entry to help you remember what to budget.
I also insert paydays into the calendar. It makes it easier to see what bills are due before the next paycheck.
Make sure to enter every bill in the calendar. You don’t want surprises.
Get Ahead Every Payday
The rest is fun and easy! Every payday, sit down and begin your budget for the next two weeks.
I open up a separate document and write the total amount of income recieved in the last two weeks. This is what I have to work with.
I then write in my necessity bills. You should always do your necessary bills first because, in life, it’s okay if the car payment is late as long as everyone is fed.
After subtracting that from the income, you should look at the calendar.
Write down all the bills that will happen before the next payday. Minus their amounts from the total.
You should have a number left afterwards. If it’s negative, you may have to be late on a bill and push it to next payday. Remember, you goal is to have a positive number here. So you might have to cut out more expenses or bring in more income.
If the number is a positive number, congrats! You are able to pay your bills on time AND have money for savings.
I like to created a buffer just in case, so from the leftover money, I keep about $10-$60 (depending on the number) as a buffer.
After that, throw the rest into savings, investing, debt or other financial goals you have.
Next is to pay all your bills now. Don’t wait until they’re due. You want to do financial stuff once a payday and that’s it! So get those bills paid and…
You’re done. Doing this has allowed us to get all our bills paid, build up a savings and have money for travel!