Eighty percent (80%) of Americans live from paycheck to paycheck.
As children, we were told to save our money to buy things that we want. However, consumerism and a weak economy has rendered many people in debt and in personal bankruptcy.
Do You Need A Budget?
In this interview with Jesse Mecham of YouNeedABudget.com, you will find out how you can make the most out of your hard-earned dollars and get of out of the paycheck to paycheck lifestyle.
Click the play button to listen to the interview.
Spend your money on paper before you get it.
- Plan what you need to do with your money so you’re not spending it reactively. You will find that your dollars go a lot further than you previously guessed.
- Sit down once a month with the money you have on hand and allocate the money.
- Focus on the money you have on your hand. Do not worry about the paycheck that’s coming in two weeks.
- If you are thoughtful about your money, you will end up spending on things you don’t really want to do.
- When budgeting your money, ask youself this: What is the most important thing you need to do with this money?
- Make a habit out of budgeting. Tie it to something you do frequently like brushing your teeth. For example, budget your money after brushing your teeth.
- Do something frequently so it becomes a habit. This applies to managing your budget.
- As you begin to plan what you want your money to do, you become more aware. You become aware of leaks, things that you don’t want to spend your money on, and put a stop to those leaks.
- Planning your budget is all about allocating money for things that you value.
- You are your best financial adviser. You make the best financial decisions for you.
Four Rules in Budget your Money
- Give every dollar a job. Assign a purpose to every dollar. Think of yourself as a drill sergeant and you give a task to every dollar that you have.
- Save for the rainy day. Divide your larger bills and expenses and treat them like monthly bills. Save money monthly for Christmas, year-end taxes, etc.
- Give yourself some slack. There’s no benefit for being accurate with the budget, there’s only benefit in making a decision. A budget only allows you to see where your money is going and make financial decisions. If you go over your budget, reassign dollars as needed. Don’t knock yourself up for overspending. Get back to game. Make yourself flexible and keep on budgeting.
- Learn to live on last month’s income. Don’t live from paycheck to paycheck. The income of small business owners and entrepreneurs vary from month to month. If you live using last month’s income, you don’t have to forecast your income and expenses. If you get a bigger income, then you can have something extra for your savings.
Make your bonus feel like a bonus
Do not spend in anticipation of a future income, e.g, bonus. Many people overspend their monthly budget, thinking that they have a bonus coming. Spend your bonus as it comes on hand and budget it. Thus, when you receive your bonus, you will really feel that it is a bonus.
Small Business Budgeting Tips
- If you’re earning money on the side, you can merge your personal and business finances.
- If your business is the sole source of your income, separate it from your personal finances.
On using credit cards
- Jesse’s main reason for using credit card is for protection. He finds comfort in the fact that he does not have to take out cash.
- If you carry a debt on your credit card on a month to month basis, get rid of it.
- If you spend according to your budget and you’re aware of where you are financially, then you should not be afraid to use a credit card.
Learn how to budget your money. You’ll feel more in control and more at peace even if you just have a little amount of money. If you need something to help you spend your money on paper, check out Jesse’s iPhone app. Just click on the link below:
About Jesse Mecham
Jesse Mecham is the founder of YouNeedABudget.com. He is a graduate of the Masters of Accountancy program at Brigham Young University in Provo, Utah, and a former (slowly recovering) Certified Public Accountant. He is busy teaching YNAB and helping others get a hold of their finances. He enjoys playing the piano, working in the garden, lifting weights, honing his golf swing and taking care of his four kids with his wife, Julie.
{ 17 comments… read them below or add one }
One of the best lessons I learned early on was to pay myself first and to treat myself like a bill.
The next best lesson I learned was to make it automatic.
That’s it! make sure you save, and don’t spend outside your means.. The spending habit is hard to break, but doesn’t get long lasting wealth. Thanks for coming over J.D. You are a wealth of info yourself!
Hi Michelle and Jesse,
Great tips for how you use your money. When it comes to credit cards, I always say if you can not pay them off monthly, you should not be using them.
When i have to go shopping for something the thing that I just shake my head about is seeing all the people that think they have to have something to drink or eat when they are shopping. How much money do you think people would save if they stopped buying something to eat or drink when they leave home?
Just a thought!
Blessing to you both and this is a subject that everyone has to take very serious.
Debbie
Debbie recently posted..Can’t Keep Up? Take the Day Off
Debbie, If I stopped eating in the car I’d save money and calories!
Michelle Vandepas recently posted..How to Blog a Book: An Interview With Nina Amir
Dear Jesse -
Biggest problem I seem to have is that some annual bills like insurance etc all come due at the same time.
BTW Most of my income is fixed.
I pay them on time – but if there is something I know I will have extra the following month – I just watch the end date on my credit card. For me it is the 23rd on Visa.
I don’t charge anything needed until the 24th.
But then I pay the bill the following month. That is my way of giving myself some slack.
Yes, I know, budgeting would solve this. Good information here.
(Incidently, I have a top FICO score)
Corinne Edwards recently posted..SHOW ME THE MONEY – Sales, Lies and Naked Truths – on Amazon
Good trick Corinne! I’m now trying to not put anything on credit cards. pretty tough for us.
Michelle Vandepas recently posted..How to Blog a Book: An Interview With Nina Amir
Great post Jesse, I agree with pretty much everything you said. I use my credit card every once in a while if it’s nothing too expensive that I know I can pay back within a couple weeks. I do need to work harder on saving some money though, I almost always live from paycheck to paycheck, will implement some of the things you said and hopefully things will improve a bit.
Thank you,
Jonas
Save a little bit, spend less. then you soon will have a little left over each paycheck to save some more. budget budget budget!
Michelle Vandepas recently posted..Marketing Your Small Business
Saving money is very important especially if there are unexpected expenses that will occur just like hospitalization or tuition fees. I agree with the tactics you can do to save, never rely on paycheck to paycheck. Learn how to cut down costs and others.
Thanks for coming over and visiting Kelly!
Michelle Vandepas recently posted..Finding Your Clients with Michelle Mahoney
I am having a hard time saving for myself and paying all my bills without skipping on of them. I do hope that I can do something about it even if it means working double shift.
I would say that credit card helps a lot especially in times of need. But you must be very careful on spending or else you will find yourself out of budget.
Thanks for your tips on budgeting. It is funny, I have so many times tried to sit down and make a budget. I think that I am overestimating, leaving plenty of room for error, plenty more room for those “unforeseen” things, but the money I put out always goes over. I am discouraged thinking that there will always be more money that needs to go out than I can possibly have coming in. Although I appreciate all the advice on how to save money, it would be nice if the economy would pick up so we could all enjoy making, instead of always worrying about saving, money.
I really need to save for rainy days or else I will be a 33 years old without a single savings on my bank account and that’s so sad. I need help for my own sake and for my future.
Hi Jesse
Your last point I know so,many people who live on their pay check and have run out of money way before their next one comes in. I can’t live like this it would drive me mad. My basic principal is if I haven’t got it don’t spend it.
Great advice thanks lee
Planning on how to spend is very necessary. I would suggest using one of those budget planner apps… really make things easy on the go.
Here’s my tip:
If you’re out of town and not near your bank, it may be possible to avoid ATM fees by using your debit card at a nearby supermarket. Buy items that you can use — and get $50 cash back or more. Kroger allows up to $250 cash back on a debit card purchase if you go to a lane with a clerk; the self-check lane has a $100 limit for cash back.
If instead you go to an ATM that’s not part of your bank, you’d typically pay your bank a fee of $1.57 and pay the ATM owner another $2.50 on average, according to Bankrate.com.