When it comes to your paycheck, it’s hard to make sure there’s enough money for essentials, savings and still leave some room for fun stuff. Luckily, there are a few moves you can make each time you get paid to ensure there’s enough money for all of these categories.
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Keep reading for a few financial experts’ takes on the best things to do financially every pay period.
1. Pay Themselves First
Frugal people always make sure to allocate a percentage of each paycheck to savings or investments. This helps set them up for success in the future.
“Even if it’s a small percentage at first, making savings a priority builds wealth over time through the power of compound interest,” said Scott Bialek, co-founder at Hurst Lending.
2. Give Every Dollar a Purpose
Bialek observed that his clients who are savvy with money always know where each dollar of their paycheck is going.
“You can go through each expense category like housing, transportation, food, etc., and assign dollars from paycheck to those needs,” he said. “This helps prevent overspending. If you don’t consciously decide where your money will go, it tends to disappear.”
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3. Use a Budgeting App
Not everything has to be done manually. When looking for one thing financially smart clients had in common, Bialek noticed it was using apps that track spending.
“My most frugal clients track every dollar spent in a budget or expense tracking app,” he said. “This accountability curbs overspending and helps allocate money towards specific goals like an emergency fund or vacation.
“One woman saved for a down payment on a home by reviewing her expenses monthly and challenging unnecessary purchases.”
4. Limit Lifestyle Inflation
Sometimes when people get a raise, they take it as an excuse to up their spending by however much more they’re earning. Bialek recommended resisting this urge as much as possible.
“As your income grows over time, it’s tempting to increase your lifestyle at the same rate. However, frugal people consciously limit spending growth,” he said.
“For example, if you get a 10% raise, you don’t necessarily have to spend 10% more. Moderating lifestyle inflation helps you save and invest more of your growing income.”
5. Stay Consistent
The most important thing to do is to follow these steps with every paycheck. Consistency is what keeps the wealth growing.
“Consistency and patience are the virtues associated with accumulating wealth over the long run,” Robert Johnson, chairman and CEO at Economic Index Associates, advised. “Accumulating wealth over the long term is really not difficult strategically. Dollar cost average into a broadly diversified stock fund and invest whether the market is up, down or sideways.
“Behaviorally, it is very difficult for many to stay the course in bear markets. But, frugal people recognize that accumulating wealth is a long game.”
Bialek agreed, echoing that it might not be the “get rich quick” advice everyone wants, but consistency is what really pays off.
“Frugality is simple but not always easy. Forming long-term habits around saving, intentional spending, and monitoring expenses leads to financial freedom,” he said. “As the saying goes, ‘Take care of the pennies, and the pounds will take care of themselves.'”
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This article originally appeared on GOBankingRates.com: Top 5 Things Frugal People Do With Their Paychecks
