How to Start a Budget When You Live Paycheck-to-Paycheck

Tired of your paycheck vanishing into expenses every month? It's time to take charge of your finances and pave the way to financial freedom. If you're struggling to budget on a tight income, know that you're not alone, and there's a way out!

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Mental

Break Free from Financial Stress

Living paycheck to paycheck can strain your wellbeing and relationships. But it's possible to make your paycheck last all month and even save some! Let’s show you how to budget effectively, control spending, and start saving.

Begin Your Budgeting Journey

Wondering how to start? Here’s your roadmap to a successful budget:

1. Know Your “In”come—Not Just Your Income

Your first step is recognizing your actual monthly income. This means what lands in your bank account after taxes and deductions, not your gross salary.

2. Track Your Monthly Expenses

Uncover where your money goes by reviewing your expenses over the past 3 – 6 months. List everything and compare the total with your income. If you’re overspending—or unsure where extra money goes—it's time to act.

3. Increase Your Income

Boosting income can be a game changer. Here are a few ways:

Ask for a Raise: We know this one may not apply to everyone, but depending on your circumstances at work, this may be just where you need to start. Work hard and make yourself valuable to your company—it WILL pay off—hopefully in the form of a raise!
Begin a Side Hustle: Clean a few friend’s houses. Do you have a musical gift? Can you sew, make jewelry, or create digital art? Create a good of some sort to sell online. Open an Etsy shop and sell to people all over the world! Or sell at the local markets or community events. Pick up some contract work for companies looking for tasks to be completed. Remote work has never been easier.
Get a Second Job: Remember, this doesn’t have to be forever. If you can swing it, a second job can be a quick way to increase income, enabling you to pay off debt that’s eating up your paycheck. If you’re looking for a weekend job, try waiting tables. You may be surprised how much you can make in tips in one weekend. Or seasonal work like clearing snow or yard work. Someone is always looking to hire.

NOTE: If you do increase your income, don’t treat it as 'spare cash'. Track every penny earned!

4. Decrease Your Spending

If increasing income isn’t feasible, focus on reducing expenses:

Cancel Entertainment Subscriptions: It's easy to view TV and streaming services as necessities, but they're not. Cut out cable, Netflix, Hulu, Disney, Spotify, and similar subscriptions. The savings from these small expenses can add up significantly.
Consider Selling Your Car: If feasible, switch to walking or biking for your commutes. This not only saves you money on car costs and fuel but also promotes better fitness.
Reduce Luxury Expenditures: Scale back on dining out, beauty treatments, fancy clothes, and other non-essential splurges.

Remember, these sacrifices are temporary but crucial for financial stability. You've got this!

5. Implement the 70% Rule in Budgeting

Now, apply the 70% rule: 70% of your income goes to monthly expenses, 20% to savings or debt, and 10% to investments. This simple strategy can transform your financial health.

6. Simplify with Our Envelope System

Budgeting can be easy with our three-envelope system. Instead of trying to keep up with a bunch of budget categories, this system only uses three. Family Expenses, Groceries, and Other. This approach helps you manage weekly spending, preventing end-of-month financial crunches.

Need More Support?

We’ve all had some unexpected change in our financial situation, or needed a helping hand at some point to get back on our feet. There are free services available in the Yukon. If you or someone you know needs some support, please check out the links below:

For more support and local resources, email info@iwic.ca.

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