The New Paycheck To Paycheck

Awhile back I started living a new way on the paycheck to paycheck lifestyle. Instead of just saving some money directly out of my paycheck when it was deposited I came up with a new rule to follow. My new rule is as follows...

To start the new process out I figured out how much money was needed to pay all my bills and still have some money for gas and random expenses. Once that figure was determined I established a savings account at a different credit union than the one where I have my normal checking and savings accounts. The money over and above my newly established figure was direct deposited into this new savings account. For example, lets say all your bills for the month total $900 and you spend approximately $400 in gas, food, entertainment, etc. with a little padding so you don't bounce your main account. You can estimate the figure at $1,500 as a comfortable cut off. So if you make roughly $2,000 a month you set $250 for direct deposit if you get paid bi weekly or $125 if you get paid every week.

This system limits how much "extra" money you have at your disposal for frills and thrills. You've already tightened your belt substantially and you are paying yourself every time you receive a check. Now is when the second step comes in. Since you are trying to avoid spending all that you have until you get your next check you will have some money left over when you get paid again. This extra money is technically money you won't need to pay your bills for the next period because you've already accounted for all that money in your most recent paycheck. What you can do then is transfer that money from your checking account to your savings account online so you are building two savings accounts simultaneously. You can then designate what each savings account's purpose is for you. One for emergencies and one for investments, or your next car, vacation, addition, who knows.

With a little planning and self restraint you could end up with thousands of dollars at the end of each year that you would have otherwise lost to small expenses here and there. I am still living on the wages I earned a few years ago and the excess that I continue to save is working for me somewhere else. Being rich is not how much money you make, it is how much money you keep.

Living on less keeps you creative and always analyzing which things in your life are needs and which are actually wants. That is up to everyone to decide for themselves. For me, I'm happy with less junk now and more security in the future.