If you work in a distribution center, you know how hard budgeting can be. But here’s 5 essential tips for stretching your paycheck and spending smarter.
1. Figure out your monthly expenses
Let’s start with a tough one. Tracking your expenses can take some time, but it's vital for budgeting within your paycheck.
Begin with your essential expenses, like your rent or mortgage, car payments, commuting costs cell phone bills, insurance, groceries and gas. Review your credit and debit card statements from a recent month and any bills you receive regularly. Use a spreadsheet or just a notebook to compile a list of expenses you can’t get by without.
Then look at what’s leftover – all the other expenses that aren’t so essential.
That’s where your budget starts, by defining what’s essential each month and what’s not.
Does your paycheck cover all your expenses – and still leave 20% for saving and investing? What non-essential expenses can you cut back on? Are you using your credit card for things you can’t afford?
2. Figure out your average paycheck
If your pay changes week by week or even month by month, budgeting can feel like a game of whack-a-mole. But try finding your average and budget within that amount.
Add up six months of paychecks, using the actual amount you take home, after taxes and other contributions, like a monthly payment for health insurance or a 401(k) plan. Then divide that total by the number of paychecks received in six months.
Use that average to understand your available income. It may not be consistent, but it’s a safe way to plan for essential expenses. And you’ll have some weeks where you can spend or save more.
3. Know your tax rate
No one likes to think about taxes unless they absolutely have to. But if you're a full-time employee, there’s a good chance a portion of every paycheck is being withheld for taxes. Did you know you can adjust that any time you’d like?
Did you get a big tax refund last year? Why wait for it? You can adjust the amount withheld for taxes on each paycheck – and get more of that money throughout the year, when you can probably use it most.
One of the easiest ways to do this is an online tax estimator. You'll put in your location, your tax filing status (married or single), and what withholdings are currently taken from your paycheck (you’ll find tax withholding on every paycheck). The estimator will show you the proper withholding to avoid an oversized refund.
If you want more cash every month with lower tax withholding, work with your employer to adjust your W-9. That’s the federal tax form that defines your withholding on your paycheck.
4. Keep tracking your expenses
Creating a budget is only half the battle. You still have to stick to it. The best way to do this is by tracking every purchase you make. You can either do this in a budget tracking app or on paper, whichever you're more likely to stick with.
Seeing where your money is going tends to make you more likely to stick with your budget. So many of us don't keep track of our transactions; we simply swipe our cards and carry on.
Keeping an eye on your transactions will keep you from spending money that you need for upcoming bills or for pay periods with smaller paychecks. You’ll also see where you may be spending too much, letting you fine-tune your budget going forward.
5. Adjust your budget as needed
Speaking of fine-tuning your budget, don't be scared to make changes to your budget. If you find that you are always spending more on your groceries than you budgeted, make changes in other categories to make up for that shortfall.
Budgeting isn't a punishment. It should be freeing, taking the guesswork out of your spending and putting you in control.
