By Sara Gilbert, GreenPath manager for Colorado and Wyoming
You may notice that your current paycheck is a bit smaller this month, as a result of the expiration of the temporary reduction in Social Security taxes. This translates into more of your pay going to Social Security and less in your take home amount.
If money is tight in your life and you are feeling a financial squeeze, here are some tips that our GreenPath counselors share with our clients, to help them evaluate how to balance income and spending, when money is tight.
Track your expenses. What are you spending on daily expenses, such as gas and groceries? This will help you decide where cuts or other spending adjustments can be made.
Save receipts for the next month and track the daily and weekly spending in your life. Do you have spending leaks you could plug?
Review your paycheck tax withholding and look at last year’s tax return. If you got a large tax refund, maybe you are having more than necessary withheld and those extra dollars previously going to the IRS could be used for current spending and savings needs. (Be sure to accurately estimate your tax obligations so that you don’t end up owing the IRS next year.)
Cut expenses. Now is also a good time to look for places to cut back. Check your insurance policies—could you raise your deductibles to free up some cash each month? Make purchases on sale, use coupons, pack your lunch, and look for as many easy fixes to cutting costs as you can. A number of small changes in spending will add up.
Keep up on the car maintenance. Inflate your tires and do routine maintenance on your vehicles. Consider using public transportation, bikes or walking to get to and from destinations at least some of the time. Check to see if neighbors or friends could carpool to work or to events you are attending. Would your employer allow you to work four longer days per week or telecommute at some times to help you reduce transportation expenses?
Avoid temptation. Be careful with debt and the temptation to use a credit card for unplanned expenses. A growing dependence on credit cards or other quick access to borrowed cash has costly repayment consequences. Increasing your debt means your monthly payments will increase which will just make it harder to make ends meet. Do you want to be paying for gas you purchase today next year?
Help Wanted? Look for opportunities for part-time work or side jobs. If you are skilled at a hobby or craft consider ways to sell some of your creations. If you have unused items like furniture or big ticket items, think about selling these things.
Roommate Wanted? Is your home large enough to take on a roommate? Due to increasing rental costs in the area, many individuals are looking for lower cost options for housing so renting out the basement may be feasible for you for some extra income.
There is much you can control, despite the loss of some pay. Take a look at your choices and come up with a game plan!