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Monday 25 November 2013

Beyond your monthly pay, find alternative sources of income


Filed under: Personal Finance |
When you rely only on your monthly take-home pay for settling your bills and other personal or family needs, it makes it impossible for you to reach your financial goals. You will end up spending and spending with little or no savings, talk less of investing. Sometimes you even go into debt in order to meet some pressing needs.
Miriam Caldwell, personal finance specialists said t is important to stop living paycheck to paycheque so you can begin reaching your financial goals. If your employer is paying you with a prepaid debit card, it may be even more difficult to stop living from paycheque to paycheque, but you can do it, she said.
She said the biggest thing you can do is to learn to budget effectively. Anyone can write down a monthly budget. It takes just a few minutes, and there are several different approaches you can take to come up with your budget. But writing down a budget and actually budgeting are two totally different things.
When you are budgeting effectively you are tracking your spending, and stopping when you run out of money. An effective budget has all of your expenses built into to it, so you are not taken by surprise when your car registration and taxes are due or when you have to pay your insurance premiums. This is the biggest step in order to stop living from paycheque to paycheque.
Once you have established a working budget, you need to begin to cut back on your spending she said. This will free up money for you to get out of debt and to put into an emergency fund. Once you do this, and get rid of your debt, you will have money to spend each month. The challenge in the beginning is to find ways to save in nearly every category. As you get better at saving, you will be able to find even more ways to save and speed up the process.
According to her, the biggest way to stop living from paycheque to paycheque is to have money in the bank. You can do this by putting money aside each paycheque. Once you have got out of debt, you can begin building a larger emergency fund. This emergency fund is the key to stop living from paycheque to paycheque in the long-term. When you have a year’s worth of expenses in the bank, you no longer feel the same worry and pressure as you deal with life’s challenges.
Another way to stop living from paycheque to paycheque is to get out of debt. Your debt is eating up a portion of each paycheque. It can hold you back from doing the things you want to the most. You will not get out of debt if you continue to put money on your credit cards. You need to stop using your credit cards until you are completely out of debt, even if you believe the rewards are worth the credit card. This will help you to really control and monitor your spending.
Your budget will help you find the extra money you need to put towards your debt each month. Avoid taking out a car loan or other types of loans until you have paid off your debt completely. Your emergency fund can help you pay for car repairs and cover other unexpected expenses so that you no longer rely on your credit cards to get out of a tight situation.
By: HOPE MOSES-ASHIKE

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