 Stop
living paycheck to paycheck
|  Dear
Dr. Don,
I keep saying to myself that I'm going to save
my money, but it never happens. I seem to be living paycheck to paycheck.
Do you have any ideas? I would love to save money, but I spend it
faster than I make it. I'm 21 with no really big payments besides
food, clothing, eating out and clubs. Love to hear from you. Thanks.
-- Glenn Grubstake
 Dear
Glenn,
If you don't have a goal in mind, it's hard to
commit to a savings plan. Start out with a goal of not living paycheck
to paycheck. To do that you have to start spending less than you
make. Put together a monthly spending plan. List your monthly expenses.
Break them down between what is contractual, like rent, cable, phone,
utilities; what you spend on necessities like food; and what you
spend on discretionary items like entertainment, including eating
out and clubs. Compare that to your monthly after-tax income. If
you're spending more than you're making, you're going to have to
adjust your spending to bring things back in line.
As you pull together a strategy as to how you will
change your spending, put a line item in that spending plan for
savings. While it seems a bit cliché to say you should "pay
yourself first," making savings a priority means you don't
save what's left over at the end of the month. Instead you set aside
savings at the beginning of the month.
Make it a goal to build an emergency fund of three
to six months worth of living expenses with your savings. Having
a financial cushion can help you weather a period of unemployment
or an unexpected repair bill without needing to borrow to tide you
over. Check the Bankrate feature, "Building
an emergency fund."
You won't turn things around overnight, but getting
into the habit of saving and out of the habit of living paycheck
to paycheck, will reap rewards throughout your life. Once you have
the emergency fund in place you put your monthly savings toward
other financial goals like saving for a car, a house or even retirement.
Just because you earned the money today doesn't mean you have to
spend it today.
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