Money Management: Breaking the Paycheck to Paycheck Cycle

How do you rate your money management skills? Are you living from paycheck to paycheck? If you are, do not feel you are alone. About two thirds of American families would be in trouble without that next paycheck. Just because you are in that situation does not mean you have poor money management skill, but those skills could probably use a little tweaking.

The bad thing about money is when we can see it and know it is available we tend to spend it. So the best thing to do is change that situation. Set your savings and retirement up so that it automatically comes out of your paycheck before you ever see it. If you never have it in your hands you will not be spending the money. Treat your retirement as a bill that needs paid every month and pay it first.

Find the money pit. Cutting out your lunch at Applebee's everyday and your morning laute is great, but these expenses are small potatoes. Don't get me wrong. They do add up, but you need to find the real meat in your spending. Look at what you are paying out each month. There are usually a couple of luxury expenses that add up to bigger money. Unfortunately, for most of us these expenses have something to do with our children, such as; piano lessons or ski trips. Some people like extravagant vacations. If you look down through your check register or credit card statements, I am sure something will stick out.

I am not saying don't have fun and don't let your kids have things, but it needs to be planned for. You need to budget for large expenditures, such as: vacations. For smaller monthly expenses, I try to eliminate an expense and replace it with the new one. Planning is the key here. You can do the things you want, but you have to compromise somewhere along the way.

Once you have developed a strategy for cutting your costs and eliminating unnecessary expenses, it is time to devise a plan for adding extra income to your budget. Are you in a position where you can ask your employer for a raise? Can you do freelance work? With the internet and email, there are many jobs that can easily be done part time from your home. Having extra income will help boost your top line, making it easier for you to leave that paycheck to paycheck cycle behind.

Once you have tweaked your money management skills, you will be able to move forward and think about the future. Getting out of the paycheck to paycheck cycle is easier for most of us then we realize, it just takes some readjusting in our lives. It all depends if you want to live for the future or if you want to stay stuck in the present.