Stop the Roller Coaster! Smoothing Out Your Budget
For many Americans, living paycheck to paycheck is a sad reality. This juggling act be can made even more difficult if your paydays always seem to arrive after your bills are due or if all of your expenses manage to fall into one week. Often times this can feel like a financial roller coaster where you’re flush with cash one week only to be dead broke the next.
If you’re currently riding a cash coaster the first thing you should do is look to smooth out your budget. By shifting things around and planning ahead you can help prevent this feast or famine cycle. Here are a few tips to get you started:
Request that your billing dates be changed
Often times the dates that your credit card, utilities, or cell phone bill are due are based off of when you originally opened your account. Unfortunately this can sometimes mean that several of your bills come due in the same week, which can quickly use up your paycheck and drain your bank account. However there may be a way to fix that.
As Kristin Wong at Two Cents recently pointed out many creditors and companies will allow you request a change of billing date. Some of the examples she cites are Chase, T-Mobile, and Dish which all allow you to adjust your billing date online. While this switch won’t actually save you any money it could save you some stress by spreading out your expenses across the entire month.
Add up your expenses (and plan for the worst)
Another way to make sure you always have money for your bills to set the money aside ahead of time. The trick is that, when you calculate how much you’ll need to cover all of your bills, you’ll want to use the maximum possible amount. Since some bills may fluctuate from month to month you may actually be able to enjoy a surplus should any of your bills come in at less than expected one month. This surplus will then come in handy in case of any surprise expenses or to help float you until your next paycheck. Of course if this surplus builds up overtime you should look into creating a rainy day fund to get further ahead of the financial roller coaster.
Bonuses and extra paycheck? Add them to the surplus
If you get paid every two weeks like many workers there will be a couple months in each year where you actually receive three paychecks instead of two. Better yet, these paychecks often contain a little extra cash since any insurance premiums that come out of your paycheck are typically only taken from your first two checks of the month. So what do you do with these extra funds? Hold onto them!
Unexpected paychecks and bonuses can be a great help when you’re trying to break to the paycheck-to-paycheck cycle. While it’s not as much fun as treating yourself to a vacation, putting your bonus towards smoothing out your budget will lead to far more relaxation in the long run. Additionally don’t forget that after that three paycheck month your next check won’t come until nearly halfway through the month so be sure to plan accordingly.
Sometimes trying to make ends meet can feel like a roller coaster ride filled with highs and lows. Luckily the ride doesn’t have to last forever. While it’s rarely easy to break the cycle of living paycheck to paycheck, following these tips for smoothing out your finances will help set you on the right course.