Do you find your paycheck stretches so far that you've still got cash left in the bank when your next check comes? If so, you're actually in the minority of Americans. According to a recent ING Survey, a full 56% of American families find themselves running out of money at the end of their pay period either occasionally or most of the time.
If you're short on cash before your next paycheck comes, you're in a precarious financial situation. Living paycheck to paycheck may not leave you money to save for the future, and you may end up in debt if any unexpected costs come along. Fortunately there are steps most people can take to make sure they've got some cash left over.
Here are a few things you could try if you're one of the majority of Americans with too little cash left before your next paycheck arrives.
1. Track your spending
If you're running out of money before your next paycheck, you need to know exactly what you're doing with all you have. For at least 30 days, track every dollar you spend. Use an app or log transactions on a spreadsheet and make note of even small purchases. Only by getting a complete picture of your finances can you determine if you have an income problem, a spending problem, or both.
2. Look for ways to cut expenses
Once you've got a handle on where your money is going, it's time to start looking for ways to spend less. You may find you notice patterns, such as a lot of money spent on lunches or a good portion of your income going to gas costs.
If you see something that's taking up a lot of your cash, consider ways you could cut the expense. This could mean making a drastic change, like getting rid of your new gas-guzzling SUV in favor of a smaller, cheaper used car that uses less gas and doesn't come with a big monthly payment.
There may also be small unnecessary expenditures that add up to quite a bit over the course of the month. If you've spent a few hundred dollars on dining out, for example, consider whether you could use restaurant coupons or eat at home more so you can keep more of that money in your pocket. The more expenses you can cut, the more you'll have left at the end of the pay period to use for other things.
Making a budget and allocating a certain amount of cash to each expense is a good way to make sure you're not overspending and to ensure the spending you do actually adds the most value to your life.
3. Aim to increase your income
There are, unfortunately, times when no amount of cutting back is going to give you enough income to have cash left over at the end of the pay period. If you find yourself in this situation, the only real solution is to look for ways you can increase the income coming in.
If you haven't gotten a raise in a long time, consider asking your boss for one -- and come prepared with evidence of recent successes to justify why you feel you deserve more cash. You could also try looking around for other career opportunities, as unemployment is low, and you may be able to find someone to hire you at a higher rate. Picking up a side gig for a few days a month could also give you the added income you need so you actually have extra money instead of living paycheck to paycheck.
4. Make paying yourself first a priority
Trying to save money when it seems you don't have any isn't easy, but you could make the process easier by allocating a little cash for yourself before your other spending.
Obviously you need to take care of the essentials first -- paying the rent or mortgage, covering utility costs, making loan payments, and establishing a grocery budget. But before you start allocating cash to anything you don't really need, set at least a little bit of money aside for an emergency fund and for retirement savings. If you have an emergency fund, you won't end up in debt if something unexpected happens as compared to not having spare cash in the bank. Also, putting aside something for retirement is essential to avoid being broke as a senior.
To make sure this money goes where it needs to, automate transfers on payday to your 401(k) or IRA and to a special savings account earmarked for emergency spending. Then you'll know how much money you have left over for other things and can budget and plan accordingly.
Living paycheck to paycheck doesn't have to be your reality forever
When you're running out of money too soon between paychecks, fixing the problem won't be easy. But if you can track where your cash is going, you may be able to find places to save. Boosting your income could also give you the leeway you need so you have a little bit of spare cash to save for emergencies, retirement, big purchases, and other financial goals. It will take time and effort, but it will be worth it in the end.