Saving money can be incredibly difficult, but it can feel downright impossible when your paychecks just barely cover your day-to-day expenses. Car insurance, groceries, rent, internet, gas, the list goes on and on. Sometimes when that paycheck comes, you just wave to it as it passes by. If you have something you are saving for- a new car, buying a house, or even just a vacation to get away from it all, here are a few ways you can save if you are living paycheck to paycheck.
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Budget by Hand
The best way to keep track of your spending is to make and keep a monthly budget. If you are a paper and pencil kind of person, you can do this easily in a notebook. You could also create a spreadsheet for yourself on the computer. Set up categories for yourself. You can be as detailed or as broad as you like. Categories of groceries, bills, rent, gas, insurance, and eating out are a good place to start. Set an amount for each category. These amounts may change slightly as you start to document your spending and realize what amount is realistic for your lifestyle.
Save all of your receipts- all of them! Once a week, go through your receipts and document the amounts in each of your categories. Be honest with yourself. At the end of the month tally up all of your monthly income versus your spending. In an ideal world, you spend only 50% of your monthly income on bills, leaving the other 50% for food and savings. That isn’t always realistic, however, when you are living paycheck to paycheck.
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Initially aim for 5% of your income going into savings. As you pare down your spending in some of your categories- maybe you switch to a cheaper cell phone carrier or car insurance company, or perhaps you just spend less on groceries or eating out, you can increase that savings amount to 10% or 15%, getting you closer to your goal even faster.
Use a Budgeting Software
If you are a little more tech savvy, an online budgeting software, such as Mint.com, can help you to keep track of your income, spending, and saving goals. Once you connect your bank accounts, the software can categorize your spending for you. It assigns a category to each transaction that hits your bank account. From there you can set up budgets for each category. The software will automatically deduct your budget amounts from your income and give you a “leftover” amount that you can use to create a savings goal. You’ll have to go through and make sure that all your transactions are being separated into the proper categories, but it is a time-saving way to keep track of your spending.
If budgeting seems like a little too much for you at the moment, or perhaps you are prone to utilizing your “savings” budget for a trip to the movies, try the direct deposit method. Many workplaces have the option to directly deposit your paycheck into your bank account. They will often also give you the opportunity to deposit into more than one bank account- a checking and a savings account for example. Choose a reasonable amount or percentage and have it input into your savings account. The temptation to spend that money can be eliminated by having it never hit your regular bank account. Don’t allow yourself to utilize funds from that savings account and you will be on your way to your goal in no time.
The Envelope Method
If your workplace does not have a direct deposit opportunity, use the tried-and-true envelope method to stick to your savings goals. Whenever you get your paycheck, take out a reasonable amount in cash and put it into an envelope. (or jar, or box, or drawer, whatever works for you!) Keep this envelope in a safe but out-of-the way place. You don’t want to be tempted to use it for day-to-day expenses. Consistently saving, even a small amount, can add up quickly!
Have you used one of these saving methods? Let us know in the comments!