I live paycheck to paycheck. There you go, I admit it. However, I am there intentionally. We all make choices in our lives that impact our financial situation. Sometimes those choices have the unintentional affect of making us live paycheck to paycheck. Others give themselves enough financial flexibility that they don’t worry about their bank account balance. I propose something completely different.
As you know, I use Mint to monitor my budget. I think it is a great tool to keep my spending on track. I usually go over in some areas and under in other areas, but do everything I can to make sure I do not go over my total spending goal.
I have a backup plan, however, for when Mint is not enough. I only have enough money in my checking account for two weeks of spending. I move everything else into a savings account each payday.
This goes along with the idea of paying yourself first. Every paycheck, I automatically take out 3% (matched by my company) for my 401(k), 3% for my Roth, and 3% in my company discount stock purchase plan. Once the cash hits my bank account, I automatically put $250 per paycheck into student loans. I then manually take a step to pay myself: I put $200 into my savings account. I can live off of what is leftover.
Some weeks, that is a little tight. I have made it through with only a little clearance a few times when I make my bi-weekly credit card payment. That forces me to evaluate my spending and lifestyle. I have cut back on eating dinner out and spending on things like movies and hobbies to make everything balance.
If you have trouble meeting your savings goals, try my strategy and let me know how it works out. I know this is the extreme version of paying yourself first, but it has been working for me. My savings are up and I am still happy with my lifestyle. I just have to make sure that my lifestyle does not exceed my income and savings goals.
How to you make sure you stay on budget? Please tell us in the comments.