It’s hard to break the cycle of paying bills on payday and feeling broke for the next two weeks. What's more, is that the fluctuation of the economy doesn't make it any easier. Here are five ways to improve personal finance so you can stop living paycheck to paycheck.
Track Your Spending
Use an app such as Mint or EveryDollar to find out where your money is going. Peter Drucker said, “If you can’t measure it; you can’t manage it.” It’s true. Track your spending for a month. You might be surprised that even though you're ordering off the dollar menu, you're spending $50 or more per week on fast-food. Or that your Starbucks treat is almost daily and running you into debt.
Pay Yourself – Build an Emergency Fund
The biggest struggle that comes with living for your next paycheck is that you never feel like you can get ahead. So, when you’re next big, unexpected expense comes up, everything seems hopeless. When you get paid, pay yourself first. Use this payment to build your emergency fund. A start emergency fund should be a few hundred dollars but for a higher level of comfort in handling the unexpected keep $1,500 to $2,000 set aside.
Get Rid of These Unnecessary Expenses
So many people say that there's nothing to get rid of, short of pawning off jewelry. That's not usually true, though. Many people have things that they feel are necessary but aren't actually serving a purpose. You can get rid of these expenses:
- Term life insurance
- “Full coverage” car insurance
- Cell phone repair insurance
- Lease or “Jump” programs with your mobile carrier
- AAA memberships
- Cable TV
- Subscription boxes
Starting from the top of this list, there is the option of selling your life insurance policy, meaning that you'll save an expense and make a little money. Additionally, unless you're in a situation where you must have full-coverage insurance, you don't need it. Instead, opt for a comprehensive coverage plan that meets your needs.
When it comes to handling your mobile carrier, many offer add-ons that you don't need, such as phone insurance and leasing your phone. Decide to keep your phone rather than upgrading. Finally, let go of memberships for now. When you're more comfortable financially, you can return to AAA or renew your subscription boxes.
Live More Efficiently
Living efficiently is about making choices that make your life easier and have less strain on your finances. Unless you live with roommates, it's likely that your drink with friends on Saturday night could take place at home. Learning to cook is another way to live more efficiently or grocery shopping once a week. You can almost always make a more efficient choice.
Downgrade Whenever Reasonable
Downgrading is a tough topic because the idea is that you're giving up something you enjoy. But if you're paying $55 a month to have the newest phone on your plan when you could pay $15 to have an older model, it's worth it. Do you really use every feature on the newer model? Also, consider downgrading your internet at home. With 5G networks, many people don't need the same amount of bandwidth that they did years ago.
