If you have developed your budget and discovered that you don’t have any cash left over, or it is such a small amount that it won’t really matter, obviously you have the choice of either finding ways to make more money or ways to cut back on spending. Over time your income should grow naturally if you can advance in your job, so it may be a matter of making sure your spending doesn’t increase with your salary. You can also work overtime for a while if you have that option, find ways to make money on the side, or even take a second job delivering pizzas or working as a cashier. There is also usually temporary work available during the holidays. Really all you’re looking for is another $300-$500 per month. If you can make a few thousand at a holiday job, you’re set for the year.
At this point I’m sure there are many who are saying there is no way they could do any of these things. You think it is beneath your dignity to deliver pizzas, or you don’t want to work during nights or weekends, or you don’t want to got through the effort to make some money on the side. This is why there are so few wealthy people and so many people deep in debt. There is no magic formula. No secret club. Anyone with a half-decent income can become wealthy – most people just aren’t willing to do what it takes.
Understand also that this is a temporary situation. If you don’t have money left after the end of the month, chances are that you have credit card and car debt. If you can save and pay off these debts, you can then put the money that was going to payments and interest and use it to build wealth, at which point you can go back to a more normal work schedule. Maybe work a second job for six months or so, use the money to pay off a car loan, and then quit and use the $500 per month you are no longer paying for the car to build up wealth. If the car lasts at least one year beyond the time you pay it off, you’ll have at least $6000 in cash to put towards buying the next one without a loan. Once you have a car that lasts for five or six years, you’ll have time to build up about $25,000 and be able to buy the next car for cash and have a lot left over to invest. If you’re always buying new cars and paying a car payment, think of all the money you’re losing in depreciation and interest.
There is also the spending side of the ledger to consider. One huge source of spending is meals out. One can eat for a couple of dollars per meal at home starting from scratch, which does not even cover the tip in a restaurant normally. If you can learn to cook, you can save a lot of money, eat healthier, and enjoy meal time with family.
Don’t have time? Consider making a large pot of something and eating portions during the week and freezing portions for future weeks. If nothing else, cook one extra meal and take it to work for lunch – you’ll be the envy of your office. Also do time savers like making one big salad you can use for several days and having tomatoes, cucumbers, and other fruits and vegetables that don’t hold up well on the side.
Other places to consider cutting back is hobbies (maybe take up kite flying or hiking instead of golf), snacks (consider having a six-pack of Cokes in the office fridge rather than buying one from the vending machine each day, and subscriptions (do you really need Netflix and cable). Finally, if you own something that costs a lot of money for upkeep (like a boat or a condo), it would probably be better to just rent one when you want instead of continuing to own unless you use it almost every weekend. You’ll probably find there are others things you’d like to do besides being down at the dock cleaning the boat all the time.
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Disclaimer: This blog is not meant to give financial planning or tax advice. It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.