You may be living paycheck to paycheck and not even realize it. Do you have enough money in savings to support yourself if you lose your job and have to spend six months looking for a new one? While this might be an extreme situation, and one you are not likely to encounter, having a cushion of money available to you, in case you need to buy a new car, have to pay a large medical bill, or want to put a down payment on a house, is always better than having barely enough to get from month to month. Here’s how to break the cycle and begin saving:
Realize that You Are Living Paycheck to Paycheck
Recognition is the first step to making a big change. You might feel comfortable that you can cover your bills, but are you contributing to your savings account? Do you have an active retirement fund? Do you find that every single penny that you receive is going out the door? If you are not saving and you find yourself with only a few cents left at the end of the month, you are living paycheck to paycheck.
Find the Culprit
This doesn’t mean finding the person in your family that is spending the most money; it means recognizing what spending habits and bills are putting you in this situation. Are you an impulse buyer? Do you keep track of how much money you spend on food? On how much you have to spend on utilities? If you are not keeping track, you are probably spending more than you think you are. Take a month to pay very, very close attention to where your money goes so you can start pinpointing the habits or expenses that are draining your bank account and start saving money instead.
Find a Side Job
There are lots of ways to make extra money, which you can use to pay off debts and start contributing to your savings and retirement funds. Asking someone in your family who is not working to get a job in order to help support the family until you have saved enough money and gotten your spending habits in check can be a great way to increase the household’s income without forcing the sole breadwinner to get a second job.