Getting paid feels amazing! But it doesn’t take long for that special glow to disappear.
Between your bills, goals, and those unexpected expenses that always find a way to sneak up on you when you least expect it, money can get tight … Sometimes even to the point of becoming uncomfortable.
When the COVID-19 pandemic hit, many households suddenly found themselves in financial distress. CNBC reported that as many as 63% of Americans say that they’re now living paycheck to paycheck.
If you’re in this situation, rest assured that there are some ways you can do more with less. In this post, we’ll go over seven great ways to make your paycheck stretch further so that you can get the most from your money.
1. Plan Your Purchases Using a Budget
One of the most effective ways to make sure every dollar you earn is going towards what you want it to is to prepare a budget.
A budget isn’t meant to be something restrictive. You should instead think of it as your plan for how you intend to spend the money you’ve earned. A budget is your chance to prioritize the things that matter to you and bring you joy so that you don’t end up wasting your money on the things that don’t.
One of my favorite things about budgeting is that I can use it to find out exactly where my money is going, and then I can make adjustments as needed. The more I’m able to spot places or expenses that are weighing me down, the more money that means I have to buy the things I actually want or need.
2. Stick to Your List While Grocery Shopping
Speaking of expenses that can weigh you down, if your spending habits are anything like they are in my household, then the grocery store is one place that gets the majority of your paycheck.
I know … making sure your family is well-fed with quality and nutritious food isn’t cheap. But if there’s anything I’ve learned about grocery shopping, it’s that you should never go without a plan.
If you don’t know what to buy, chances are you’ll end up throwing a whole bunch of stuff in your cart that you don’t really need. That means more food that will eventually expire and just get thrown out – money wasted!
To keep your grocery bill from spiraling out of control, do the smart thing and make a list ahead of time. Think about how many meals you need to make that week, what they will be, and how much food will be needed.
By doing this, you’ll be sure to eat everything you cook. And less waste means more money in your pocket.
3. Take Advantage of an FSA
If you’re not already signed up for an FSA (flexible spending account) through work, then you definitely need to head to HR now. An FSA allows you to set aside tax-free money that you can use to cover your medical and dependent care expenses.
The way an FSA works is simple. You decide how much you’d like to contribute to your FSA before taxes are taken out of your paycheck. Then, as you make qualified medical and dependent care expenses throughout the year, you can either use your FSA debit card or reimburse yourself with the money from the FSA. The net result is that you never pay taxes on the funds that will be used.
The FSA contribution limits set by the IRS (as of 2021) are:
- $2,750 for medical expenses
- $5,000 for dependent care
The only catch when it comes to FSAs is that they are a “use it or lose it” arrangement. If you don’t exhaust all of the money you contributed to your account for the year, then it will be forfeit. For that reason, I’d suggest thinking ahead to what your expenses will truly be and contributing conservatively to the FSA.
4. Have Fun on the Cheap
I love going out and having a good time just as much as the next person. But sometimes it can get pretty expensive doing activities like eating out at restaurants or going out for the evening.
If money is a little tight, then it might be helpful to redefine what you think of as “fun” and try to find some less expensive alternatives.
For instance, you could:
- Go out for coffee with your significant other or friends instead of going to a restaurant
- Watch a recent movie with your children that you borrowed from the library
- Look for local events in your town like concerts in the park or festivals
Especially if you’re looking for something to do with someone you value, focus on going places where the two of you can just simply talk and unwind with each other. When you put the focus on the connection with the other person, the activity itself will be unimportant.
5. Get Paid by Your Credit Card Every Time You Shop
If you’ve got a credit card that gives you rewards points every time you make a purchase, then this can be a great way to stretch your dollars.
Over the years, I’ve turned my credit card rewards into thousands of dollars of free cash, gift cards, and travel redemptions. That’s not an exaggeration – one time, I even used my points to get over $5,000 worth of flights to Hawaii!
How do you do this? Look for credit cards that give you rewards for things you buy regularly. For instance, if you drive a lot, then look for a card that favors gas station purchases. A lot of the major credit cards will often rotate spending categories every three months, so you can be strategic about your purchases and maximize your rewards every quarter.
Of course, this tip only works if you use your credit card responsibly and only buy the things you actually need. Also, you’ll want to be in the habit of paying off your balance every month so that you never owe the credit card company one cent of interest.
6. Switch to Cash
Although this tip may seem a little old-school, if you’re worried about making too many impulse purchases, the experts will often recommend a very tried and true solution: Switch to paying for things with cash instead.
According to a survey conducted by the credit card processing company Shift, consumers spend 83% less when they use cash as opposed to a credit card. This is because, psychologically, the action of parting with physical dollars is more painful to our brains.
By contrast, when we pay for things with plastic, even though we know how much we’re spending, the loss is more abstract. You don’t actually “feel” the loss until nearly a month later when your credit card bill arrives.
If you don’t believe me, give this a try for at least one week. I guarantee that every time you have to count your money out, it will be much harder to hand it over to the cashier than swiping your card.
7. Challenge Your Expenses
One of my favorite ways to find more money is to work on reducing the expenses I have currently. At least once per quarter, I’ll pick a bill, shop around for a better deal, and then negotiate with my current provider to see if I can get a lower rate.
I’ve been amazed over and over again at how well this strategy works. From streaming services to insurance providers, I’ve been able to find competitive quotes and then use them to get my current bills reduced. One time I made just one call and it ended up saving me over one thousand dollars for the year.
If you need help trying to isolate which of your expenses are weighing down your budget, then let an app like Buxfer help you figure this out. Buxfer automatically syncs to all of your bank accounts and credit cards, so your transactions have no place to hide. Click here to find out more about how Buxfer can help learn more about your spending trends.
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