How can I stop living paycheck to paycheck?
You are not alone, this question is asked often. Our advice is to prepare a budget or spending plan. A spending plan is one of the best tools to address the concern of living paycheck-to-paycheck.
If you are not familiar, a spending plan is where you list your income on one side of a piece of paper and all of your expenses on the other side, and then add up the two columns. Hopefully, the left side (income side) is greater than the right-side (expense side).
You may have an indication of where money is spent as you go through this "cash flow" exercise, but you may be surprised to learn a few things. That is, you may have an idea about your "standard" bills such as mortgage/rent, utility bills, commuting costs, etc., but you may be surprised by some of the non-standard or "one time" expenses such as gifts, pet expenses, or car repairs. While this is something you may be able to do one evening, I suggest reviewing this over the course of a week or maybe even a month because these one-time items can appear at any point.
If the expense side is greater than the income side, then you need to ask where you can cut some expenses. If there are many "one time" items, then you may need to ask if these one-timers are necessary.
Further, take a good hard look at utility bills to make sure you are not paying for items you are not using. Cell phone and cable bills seem to be the most susceptible to either erroneous or superfluous charges. Download FPA’s budget worksheet to help you create your spending plan.
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