First: Total up your monthly income. Include your paycheck, any hustles, freelance work etc. Second: List all your monthly expenses. Include your car, house/rent, utilities, Internet, phone, credit cards, groceries, clothes, hair, and other service costs. Be thorough and don’t miss anything.
- Total up your expenses. Example: $900
- Total up your income. Example: $1500
In this example, you’ve got $600 left over to either play with, donate and/or save. It’s always a good idea to save and donate. You’ll need money for a rainy day or to meet some financial goal, and it’s always cool to help someone or some cause through donation.
Third: Everytime you get your check, set aside a portion for important bills first. Don’t spend it. Make sure rent, utilities, phone and food are taken care of first, these are the essentials. You should give yourself an allowance from the remaining money after expenses are deducted.
Put the money in an envelope and only touch that money. All the rest can be stored in the bank and set up to auto pay your payees. Most banks have this free option, talk to them about it. This will make sure your essential bills are paid off, thus securing your shelter and mobility.
In the example above, the living expenses accounted for 60% of the person’s total income. 40% left over is pretty good. The idea is to have a good amount of money left over to live on. You have to determine what percentage you want left over.
If you find that you have little to no money left over after expenses, or you can’t even pay your essenitial bills, you may need to consider finding a better paying job or an additional job. Working paycheck to paycheck isn’t living, it’s surviving and you want to live. What’s the use of working just to eat and sleep just to go back to work again. You want to have some fun money left over for living.
Reducing Your Expenses
A lot of people spend the majority of their money on clothes, food and entertainment only to find out that they can’t pay the rent when it’s due. I’ve seen too many people on the bus wearing gold chains, rocking expensive smart phones, designer shoes, jeans and jackets, but ain’t got no heat at home, while about to be evicted. It’s important to be disciplined and stick to the budget.
Another way to make ends meet and be able to take care of the important bills is to reduce your cost of living:
- You could get a cheaper house/apartment
- Shop at a discount food store like Aldi or Save-a-lot
- Stop eating out, get some frozen dinners
- Better yet, cook with whole foods (much cheaper and healthier)
- Buy clothes from thrift stores
- Sell you high priced car, and get a cheaper, used one
- Reduce the cost of heating by covering your windows, getting some better ones and wearing an extra sweater in the winter
Now, if you’ve just got to look sharp, have that name brand cereal, the latest smartphone while living in that fancy neighborhood, you’d better make enough money to support it with room for saving and giving, if not, you’re just plain foolish.
Swallow your pride and work to get better income and then you can live the way you want. Frontin’ like you got a million bucks is only killing you and no one really cares all that much about how you look anyway. This isn’t everyone’s case, of course. Sometimes you just have to get your bread-up and the things you’ve been doing, whether it’s a low paying job need to change. Realize their needs to be a change and work towards that change.
Use the Internet to find opportunities that bring in additional income. Go back to school, or educate yourself for free at the library and through reputable sites on the Internet. There are tons of things you can do. You can make it if you try.
Take care of yourself.
