Everyone loves payday, but too many people don’t know how to allocate their paycheck in a way that best serves their financial needs. Here are four simple tips to help you manage your paycheck responsibly!
Budget for necessities: After your contributions are deducted from your paycheck, you will be left with your take-home pay, or net income. You will use this money for covering expenses until the next payday, so it is best to budget first for necessities, such as your mortgage or rent payments, utility bills, insurance premiums, etc.
Budget for wants. Once you have set aside money for your needs, you can use some of the remaining funds for wants, or discretionary expenses. This can include entertainment costs, dining out and clothing, in addition to what you really need.
Pay yourself. Now that you have taken care of your needs and wants until the next paycheck, it is time to think about the future. Put a percentage of the remaining funds into savings, including your retirement fund, share certificates, investments, emergency funds and the like.
Don’t feel forced to spend it all. Many people mistakenly think they need to spend all of their paycheck before the next one arrives. If you are left with extra money at the end of the month, there is no need to waste it. You can add it to your savings, get ahead of your debt or stash some cash away in your club account for the holiday season.
Learning how to wisely manage a paycheck can take some time, but once you have gotten the hang of it, it will be easy and almost happen by itself. For more helpful tips, listen to SeaComm podcasts on money topics that interest you. Click here to get started!