The Simplest Way to Stop Living Paycheck to Paycheck!

Updated: May 18, 2020

Let me guess? You are getting fed up with working so hard for your money to have nothing to show for it at the end of the month. Every penny is gone. And worse yet, if you lost your job, or something happened where you couldn’t work for a week or two, you wouldn’t even be able to pay your bills. Sound familiar? I know, you know how I know? Because I used to be in your exact same shoes. I used to barely squeak by every month and if an unexpected expense hit, or if I missed a paycheck I was in big trouble.

And don’t worry, you and I aren’t the only ones who have lived this way. According to Forbes, over 78% of the American population is living paycheck to paycheck. So you are not alone. And the good news? There is a way to change this, to get out of the vicious cycle. And it all starts with a budget.

Now before you run away from the word or idea of budgeting, hear me out. I know it is a scary word to most people. They think it is going to restrict them, and control them, when actually it’s the opposite. Believe it or not, a budget can actually give you financial freedom and control over your money. Instead of money controlling you and telling you where you can and can’t spend, you are telling your money what to do. I can attest to this personally, because when I started budgeting is when my life started to change for the better. And I’ve been doing it ever since.

The example below is what American’s average monthly expenses look. Your expenses will vary based on your spending habits, etc.

What does monthly expenses WITHOUT budgeting look like:

As you can see, not budgeting means not knowing where your money is going. It typically means living above your means, and taking out debt to afford your expenses. Typically this leaves you living paycheck to paycheck, not doing what you want, no vacations, no emergency savings, no paying off your debt or your house.

If you don’t know how much you are spending in an area, you don’t know what needs to change. When we first started looking at our monthly expenses we couldn’t believe how much we were spending on things like coffee and eating out. At one point we spent almost $600 in a month on going out to eat!! $600!!! For a family of three! Right then and there we knew why we weren’t getting to do the fun things we wanted, and we knew, things had to change.

Let’s now look at what a month with budgeting looks like:

As you can see, when you budget and you know your spending habits and are telling yourself and your money how much you are going to spend on every category you pick how much that variable amount is going to be. I knew when we were spending over $400 a month going out to eat, but also buying a month's worth of groceries that we were actually wasting food, and over spending. We cut our going out to eat budget down to under $100 without having to increase our grocery budget.

With budgeting, I now have $416 extra a month that I can use in my debt snowball to pay off credit cards, my car, whatever debt I’m working on at that moment. Or I can put some away in a sinking fund for a vacation we’ve been wanting, or that new TV. Whatever it is, I now freed up the money I work hard to get, to actually do what I want with it!

Check back next week where we will dive into building your budget!

Tell me how your budgeting journey has been, or what items in your budget were you able to cut back on? And then what did you do with that raise you gave yourself?

Love the idea of budgeting? And can see the value, but not sure where to get started? Let me know, I would be happy to help!

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