Here's a piece from Kiplinger's that probably rings a bell with many people out there living paycheck to paycheck. It's really just simple personal finance advice that I've covered before, but sometimes the best financial advice is just covering the basics. Besides, it's not like most people are doing these things -- otherwise, who would need a personal finance blog to make such suggestions? ;-)
Anyway, here are some of Kiplinger's thoughts (in green) along with commentary and corresponding post links from me:
The first step toward breaking out of the paycheck-to-paycheck cycle is to track your spending on a daily basis -- down to how much you paid for a cup of coffee.
A successful financial plan always starts with spending. Why? Because spending less than you earn is the one way that most people can become wealthy and even a small spending leak can empty your money bucket quickly. And controlling your spending is easier than raising your income. Besides, no matter how much you make (even if it's millions of dollars a year), if you spend more than that, you're going backwards. Hence, it's good advice to start with spending.
Once you know how much you're spending each month and on what, you can set achievable goals, such as paying off debt, saving for a house or building a nest egg, and create a budget.
As I said, pretty basic. But good stuff. Some thoughts from me:
To stay within your budget and reach your goals, you might have to cut costs. [Some ideas]:
- Find deals.
- Lower insurance costs.
- Cut interest rates.
- Avoid unnecessary fees.
There are lots of money saving ideas here at Free Money Finance. See this link that leads to my saving money category.
Another way to help avoid living paycheck to paycheck is to increase your income -- without begging for a raise or switching careers. Start by adjusting the amount of taxes being withheld from your paycheck. Our user-friendly calculator can give you an idea of how many more withholding allowances you should be claiming on your W-4 form.
Then look for other ways to keep more of your paycheck going into your pocket instead of Uncle Sam's. For example, employer-sponsored programs that allow you to contribute pre-tax money toward routine expenses -- such as health care, child care or retirement savings -- can help your paycheck go further. Or make the most of your cash by using tax-advantaged plans outside the workplace.
I'm a broken record when it comes to the "don't give the IRS an interest-free loan" issue. See Getting a Tax Refund is Costing Americans Billions for my thoughts.
A couple more thoughts:
1. I've posted this sort of basic advice several times. See these links for more details:
2. In addition to the above, I'd add my standard thoughts on the importance of your career:
Your career is your most valuable financial asset, offering you many financial benefits. You can make the most of it by getting a college degree and managing your career to its full potential. Doing this well can earn you millions of dollars in extra income throughout your lifetime.
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