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Living Paycheck to Paycheck - Part 1

Living a Better Life® (from the editor's desk)
by Michelle Jones

Personal debt is rising rapidly and is at an all-time high. The majority of Americans are living paycheck-to-paycheck. This is a stressful way to live, but it doesn't have to be this way.

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One Budget at a Time

As the Founder of BetterBudgeting, my heart aches that so many people are still struggling with money. We will continue to help in whatever way we can, making a difference in people's lives, one budget at a time.

Many may argue that we just need more jobs and higher pay. Though that would be wonderful, it won't help much if we are terrible about budgeting our own money.

The following budget example is one of my favorites that financial expert, Larry Burkett, used to share often. It paints a vivid picture of why making more money is usually not the problem.

There's a man who makes $30,000 a year, one who makes $50,000 and another who makes $100,000. You probably think the first one may be getting by okay, the second one is doing better, and the third one is doing GREAT. Well, think again. When asked how they're getting along, each one reports being in the same financial situation.

"We're just BARELY making ends meet!"

Better Budgeting

New jobs and more money are great, of course, but if we don't get out of debt and start budgeting BETTER, it really won't matter much in the long run.

I wish our schools would spend much more time teaching personal budgeting. Maybe even a full year in high school. And, in a perfect world, credit card companies would not approach anyone under the age of 21, maybe even 25. At least not until they have several years of cash-basis living under control.

That ship has already sailed for most of us. But it's never too late to learn how to manage your finances better.

If you are in debt or living paycheck to paycheck because of medical bills, job loss, expensive repairs, a precious new mouth to feed, or any other financial difficulties… you are not alone.

Life's Setbacks

Some people think that anyone who is struggling is either a poor money manager or must be throwing money away. But we know different. Life can knock us down pretty hard and even just one setback can affect our finances for many years.

There are situations when no amount of good budgeting may seem to help, but when the clouds clear and things get better, that basic budget that you’ve put in place will surely come in handy. When your finances improve you'll be able to keep things running more smoothly and be better able to handle the next setback.

No matter where you're at financially right now, you can start a household budget and do your best to stick to it. BetterBudgeting has more to do with living than budgeting. What I mean is, you can write everything down and fill out any budgeting worksheet you want, but if you don’t live what you have set out on paper then it won't work.

Real Money

I’ll give you another example. Let’s say you look over your finances and decide that you have $50 a week to spend on food and groceries. But then you go out and spend an additional $30 on dinners out during the week. What happens now? You’ve spent $80 instead of your $50 budgeted expense, so you're already $30 behind. And that’s just for one week. It may not seem like much, but do this for 4 weeks and you’re over budget by $120. A full year; $1,560.00 over budget.

There’s an interesting thing about money. Unlike credit, loans, and investments that can fluctuate daily, our actual cash money is what it is. When we use checks and debit cards, it can seem a little bit like Monopoly money. Unfortunately, that $50 you had budgeted for food is still just $50. It’s not $80.

Now of course you can add a credit card and make it seem like $80, but then you could up paying even more (in interest charges) if you don’t pay it off in full when the bill comes.

Or, you can borrow the money from other budgeted expenses. But then how will you pay for those things? You can spend the extra money because you’ve got additional funds coming in next month, but what if those funds don't come in? Or worse, the car breaks down and the extra funds won’t even be enough to cover the repairs?

Having a budget means you’ve looked at the money that’s coming in and have rationed it all out for your expenses. Hopefully, including gift giving funds and at least one interest-bearing savings or investment account.

Keep Reading - Keep Saving

The 'IN vs. OUT' totals should be the same amount. If the OUT section is more than the IN, continue working on your budget until they are at least equal. Even if that means seeking more income. Continue reading our money-saving tips and articles each month, they will help. Sign up for a free subscription to our Ezine, if you haven't already!

BetterBudgeting means living a good life within your budget and keeping your living expenses down to what you can really afford. So you will not be among that majority of people living paycheck-to-paycheck.

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Continue to Part 2

Return to Budgeting Article Index

Copyright © 2003 by Michelle Jones. All rights reserved.

"It's not about being able to spend more money.
It's about enjoying and managing what you already have... BETTER!"
- Michelle Jones, Founder of BetterBudgeting
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