Some resolutions are made every year, and some resolutions
seem to be made every two weeks. That's because many of us have a difficult
time breaking the cycle of over-extending ourselves financially and barely hanging
on until that next payday.
Mitch Vocke, Chief Lending Officer at Telhio Credit Union,
suggests that financial education and planning are the starting points to
ending this frustrating cycle.
"I've met with quite a few CEOs of mid-sized businesses with employees who are
asking for advances on their paychecks," he said recently in a Business
First Table of Experts discussion. "Research has shown that people who live
paycheck to paycheck are less productive at work. [It can also affect] the
overall health and wellness of the business owner, the business entity, and
employees."
Unfortunately, it's a common problem. In fact, as of August
of 2023, roughly 61% of Americans are living paycheck to paycheck, an issue
that impacts both low-wage and high-income families alike, according to a
report this month on CNBC.com. And while rising living costs contribute to the
problem, 10% of people in this scenario admit non-essential spending is the top
reason for living paycheck to paycheck.
If you are determined to make your paychecks last beyond two
weeks, consider making a plan for every paycheck. For this exercise, you will
essentially begin by telling your money what to do.
Step 1: Write down how much money you currently have and what you want that
money to do before your next paycheck. It may sound simple, but having one goal
is a great place to start. So, to begin, complete the following sentence: I want my money to ___________ before my next
payday. This is your starting point.
Step 2: List out your income and expenses. Make sure to
include any incidental expenses that are coming up this month. Is there a holiday party, a birthday, or
perhaps school fees? Write it all down.
You will also want to factor in money for gas and groceries. Next, print
a calendar and highlight your paydays.
Note how much money you are expecting to receive on each payday. Then, go back to your list and write out your
expenses and their due dates. Match your expenses with the corresponding pay
period so you can determine which paycheck will cover each expense. The goal is
to assign expenses to each payday check.
Step 3: Repeat for each month. Having a structured plan for
your paychecks will not only empower you but also bring a greater sense of
peace of mind. If you find extra money remaining, make a plan for those funds
as well.
Discretionary spending is the amount of money you spend on
non-essential purchases, such as entertainment, meals at restaurants, gifts,
toys, and other related purchases. Most people are surprised at how much money
they spend on non-essential items. Set aside funds to cover your high-priority
bills first. Allocate a reasonable amount of money for miscellaneous purchases,
such as dining out and entertainment.
Being in control of your finances won't just fix your
budgeting problems, but it will contribute positively to your overall health. High
levels of financial stress manifest through physical symptoms like sleep loss,
anxiety, headaches or migraines, compromised immune systems, digestive issues,
high blood pressure, muscle tension, heart arrhythmia, depression and an overwhelming
feeling.
So, make a resolution to plan your paychecks and break the
cycle of worry. Being proactive will put you back in control of your health,
your happiness, your productivity and your financial well-being.
