Understanding your new paycheck: Part III
Now that you have a rough idea of how to read your paycheck and important plans for savings, it's time to responsibly spend the money you've earned.
When you read “spend” did you think of going to the mall or the movie that's opening this weekend? Unfortunately, if you want to be in control of your finances, you need to focus on spending for the essentials first.
1. Your bills and other necessities
Now that you're (probably) living on your own you have to think of all the bills - housing, utilities, streaming services, gym memberships, etc. For the most part, these will all be fixed expenses that can be budgeted out in advance. Even if these bills are not due right away, put this money aside and make sure to not spend it before the bill is due. If you have the funds, go ahead and pay these bills early to avoid overspending. This will keep you on top of your budget, and be a more accurate measure of your disposable income.
2. Groceries and dining out
No matter how strongly the idea of a Chipotle burrito tries to pull you in with its stuffed goodness, be sure to pace your eating-out ventures. Unfortunately, eating out on a daily basis not only takes a tax on your waistline, but your budget as well. Do not spend more on food than you can afford, and plan meals in advance so that you can create lists to follow when grocery shopping. This will prevent your stomach from going on a vision quest in the grocery store and stop any impulse food purchases. This will stock you up on healthy and affordable leftovers, all the while keeping you out of the drive-thru line.
3. Reward yourself
Making a budget and sticking to it can be difficult, especially when you're trying to be in control of your finances, including paycheck and bills. With all of the commitments you've made for your first paycheck (and every other), there comes a time when you need to treat yourself too. Maybe you go on a nice dinner or on that short vacation on a long weekend with your friends. After all, you've earned it - literally.
Budget the funds you have able for fun and divide it up into weeks. An easy way to keep track of your spending money is to use the “envelope” method. Change your spending money into cash and put it into a different envelopes for each week. This will physically let you see when you have money to spend and when you are running low.
Saving your money and sticking to a routine budget every month may seem difficult at first. However, stick with it and you will be thanking yourself down the road when you need to fall back on your short-term savings, or in the future when you retire and can live very comfortably instead of having to constantly worry about your money.
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