Break Out of the Paycheck-to-Paycheck Cycle - Quicken Loans Zing Blog

Money can be one of the most stressful parts of our lives. Whether you make $40,000 a year or $400,000 a year, how you spend your income is extremely important.

Someone making $400,000 could still feel broke if they spend above their means. At the same time, someone making $40,000 a year and lives below their means could feel less financial strain then the first person.

“You must create financial margin to achieve anything financially. Sounds really basic, but you have to spend less than you earn. I’ve had clients that earn $500,000/year but spent $505,000/year. They were just as stressed about money as the person barely scraping by making $12/hour. Income isn’t the solution to spending problems,” said Gabe Lumby from Cash Cow Couple.

Spend Within Your Means

What’s the best way to ensure you don’t spend more than you make? By putting together and sticking to a monthly budget.

Budgets aren’t a punishment for your poor spending habits. They can give you permission to spend. If you set realistic budget categories, you’ll be able to spend money guilt-free.

For example, if you set your monthly grocery budget at $600, you’re giving yourself permission to spend $150 a week on groceries. By setting these guidelines at the beginning of the month, you can spend your money with a certain amount of peace as long as you don’t blow your budget.

The best way I have found to create and track a budget is to use the EveryDollar app. You can use this on your computer or your phone, and it’s the easiest budgeting app I’ve found.

Impulsive Spending and Over-Spending

Impulsive spending and over-spending are some of the biggest culprits of a blown budget. Whether it’s a $3 item at Target or a $150 spontaneous shopping spree, impulsive spending can keep you from achieving your financial goals. If you’re the type of person that has a habit of spending money when you are emotional or bored, you may want to stay away from the store or mall and go for a walk instead.

One way to help get rid of impulsive spending is to give yourself 24 hours to think about the purchase before you actually buy it. This will give you time to think about if you really want it or if it was just a knee-jerk reaction to wanting to buy something. Of course, that 50-inch TV that is on sale would look great in your living room, but you may regret buying it in the morning.

Don’t tell yourself, “This is the cheapest I’ve ever seen this” or “I’ll never find this price again!” That is most likely not true. Don’t let the retailer’s marketing convince you that you’ll miss out on something if you don’t get the item today.

It’s also not a good idea to go shopping when you’re hungry. We’ve all likely bought more food than we needed or too much junk food when we’ve gone to the store hungry. The best thing to do is eat a healthy snack before you leave and stick to a shopping list.

“Rarely do I allow myself impulse-buys anymore. Retail therapy is not a thing, because you only feel good until you get home and realize you spent money on something you don’t need. Now, I go to the grocery store with a shopping list (and stick to it!), and I plan out retail purchases,” said Rikki Ayers from the Own Up, Grown-Up podcast.

Spending Money on Food and Eating Out

Another thing people tend to spend a lot of money on is eating out. Eating out for lunch every day can really add up. If you spend $8 to $10 a day on lunch eating out during the week, that could add up to $200 to $250 a month.

If you pack lunch and bring it to work, you could spend less than half the amount you do when eating out. Plus, packing a lunch usually ends up being healthier for you.

Wants vs. Needs

It’s important to know the difference between what you want and what you need. This can be quite a challenge. There really aren’t that many things we truly need. We need basic food, but that doesn’t mean that you can justify going out to eat multiple times a week. We also need basic clothes and shoes, but that doesn’t mean you always need to buy the latest and greatest fashions.

It’s important to make sure you keep your true priorities top of mind so you don’t get sidetracked by the shiny new items in the store windows. It’s good to be more strategic when deciding to buy new items. There can be an instant feeling of satisfaction when buying a new item, but it may be outdated or out of style very quickly, and you might no longer want it.

“Ask yourself why you are buying something. Go through your expenditures and get rid of the low-hanging fruit: the expenses that don’t add any value to your life. Look for lower-cost substitutes where brand doesn’t really matter. Figure out what you really enjoy, and focus your spending on those things and experiences,” said Sharon Marchisello, author of “Live Cheaply, Be Happy, Grow Wealthy.”

Keeping Up with the Joneses

It’s hard to not want everything your friends and family have or to want to keep up with the Joneses (i.e., that one friend most of us have on Facebook). You likely don’t need that brand-new phone or another pair of shoes. Learning to be more content with what you have will help you keep your spending down.

It’s easy to want the things that other people around you have, but acting on that desire could lead you down the path into debt and discontentment. Becoming more content isn’t something that happens overnight. It’s something you need to continually work on.

Staying Away from Temptation

One of the hardest things when trying to fix out-of-control spending habits is to not allow yourself to be tempted by things too often. It’s very hard not to be drawn into stores that send you coupons every day.

Take some time to go through your emails and unsubscribe from the stores that tempt you to come in and spend money. It’s OK to refrain from using that 20% off coupon that Bed, Bath & Beyond texts and emails you almost every day.

Select one option to get the coupons and change your settings so you get fewer emails. It can also be hard not to spend money when you go to places like the mall, Target or Best Buy. Limit the amount of times you allow yourself to go to the stores that tempt you until you break the spending habit. It’s really easy to give into the temptation to buy something you don’t need when you’re standing in the store.

There are a lot of reasons to keep your spending habits in check. For some people, their reason may be to pay off debt. Other reasons may be to save money for a down payment on a house and save for retirement.

According to Acorns’ Money Matters report, more than 40% of Americans age 18 to 35 spent more on coffee in the last year than they invested in retirement. If we were to save some of that money instead of buying coffee, it could end up being a good-sized down payment for a house in less than a year or a big chunk of change in a retirement account. By changing just a few spending habits, the financial goals you have can be that much closer to becoming a reality.

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This Post Has 2 Comments

  1. This may smack of desperation, but both my husband and I sell blood plasma on a regular basis. We both have decent jobs, our home is paid for and the kids are grown and on their own. But the money we “earn” is our vacation money and we stash it in a savings account at a credit union in another town, with no ATM card for it, so it’s pretty inaccessible to avoid impulsive withdrawals. We also deposit unexpected money like small refunds, rebates, yard sale proceeds, etc.

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