Managing your finances in 2023 can really feel like riding a rollercoaster in the dark sometimes. Or like one of those dreams where you accidentally turn up to work naked. But it doesn’t have to.
When you’re living paycheck to paycheck, money worries can dominate every aspect of your life, and take up precious brain space. Add to the mix money shame and good old bootstrap theory, and you’ve got a recipe for feeling terrible about your money situation.
If this is you, don’t worry. First off, you’re not alone. 64% of Americans are living paycheck to paycheck right now.
Whether you’re a college student managing your finances for the first time, or you have been working for many years, learning how to manage money wisely is important for getting a sense of financial stability, meeting money goals, and planning for your future.
So we’re gonna explore some key principles of money management and offer practical tips to make the whole money thing less scary. That includes looking after your mental health when money is tight.
We’re gonna include ways our money app can help do these things (because you’re literally on our blog right now), but don’t worry - all of the Cleo features we include in these 10 tips are completely free to use.
How to stop living paycheck to paycheck: 10 tips for better money management
#1 Track your spending
When money is a source of stress, it’s tempting to hit it with the old “lalalala if I can’t see it it doesn’t exist” technique. But the first step to getting control of your spending habits is to get a picture of your money situation as a whole. And since it’s 2023, there are ✨ robots ✨ that can do this for you.
We have a whole list of the best money management apps out there so you can shop around, but we’re gonna give Cleo as an example here. Because we’re slightly biased.
After you download Cleo for free, you’ll be asked to connect your main bank account. Don’t worry, we won’t ever move any funds around unless you sign up for a paid membership. All Cleo does here is analyzes your transaction history, and uses this information to help you spend better.
She’ll categorize your incomings and outgoings, sort them into essential and non-essential, and create a cute visual to display all of this information.
With this foundation in place, you can start building a budget. But there’s one thing you’ll want to do first…
Since adding money to your savings will probably be a factor in your budget, setting savings goals is the next step.
If the money is there to spend (and you have a human brain and aren’t a robot) chances are, you’ll probably spend it. So you have to have a reason that motivates putting money aside each month. No matter how much that is.
Maybe it’s for a dream car or apartment. It’s always wise to set up an emergency fund if you don’t have one already.
If building savings feels like a tough thing to do right now, start as small as you need. It could be $40 a month. And since Cleo has already tracked your spending, you’ll be able to spot any places your money is leaking to each month (hello subscription service you forgot to cancel after the free trial) - and potentially free up some cash.
If you save $40 a month for three months, you’ve got $120 that’ll cover you when your car is crying out for gas just before payday, without having to face overdraft fees.
As you strengthen your money management muscles, you can gradually increase the amount you save each month, without feeling uncomfortable. It’s all about being sustainable. You’re more like to quit if the amount you begin with is way higher than you’re used to. You’ve got this.
Now you have your goal, and an amount you want to transfer to your savings account each month, make it automatic with Cleo. Remove any temptation to give your precious savings money to the good people of Uber Eats.
If you have Auto-Saving turned on, Cleo will aim to move money to your Wallet once a week, on a Thursday. She will send you a notification on Wednesday if she thinks you can afford to put money in your Wallet, and the transfer will be made the following day unless you decline the saving.
Of course, this doesn’t mean you can’t give yourself a little treat after surviving a long day of late-stage capitalism. A budget should work for you, not against you, but this will be a separate category in your budget to your important savings cash. This leads us to the next step…
Or in this case, have a super-smart budgeting app create a budget that works for you.
Cleo has categorized your spending. And you’ve set up your savings goals. What you’re left with is a personalized budget that’s built around your needs.
Cleo will help you stick to your budget by calling out when you’re about to hit spending limits and keep you on track by showing you exactly how much you have to spend each day.
As you go, you can adjust your budget as you see how it works in the real world. Maybe you find you can increase your savings goals. Maybe you spend less on eating out, and a little more on grocery shopping. It’s all about balancing a healthy dose of self-discipline with realistic goals.
#5 Get roasted
Once you’ve got your budget, chances are, you’ll probably need some tough love to stick to it.
That’s tough love, not self-shaming. If you’re struggling to stick to your budget, hating yourself is not going to help. In fact, feeling terrible about yourself will probably make you less likely to stick to your goals.
If you type “roast me” into the chat, Cleo will playfully roast you for your chaotic ways, showing you where you f*cked up financially, without destroying your self-esteem… entirely.
And if you’re really not in the mood to get roasted, that’s cool! Cleo will hype you for all the good you’re doing (more on this in tip #10).
#6 Try the cash envelope system
Ok, this isn’t going to work for everyone. And it’s definitely not sustainable in the long term… unless you get paid in cash… but that’s none of our business…
If you’re someone who needs to drastically change how you spend your money, you could try using the envelope budgeting method for a short time.
It’s pretty self-explanatory, involving taking out your spending money in cash each month and splitting it up into envelopes for each spending category. We have a whole article on what exactly this means. Check it out (as long as you come back to Cleo afterward) 🙃
#7 Smash your debt
If you’re having to put a huge chunk of your paycheck into paying your debts each month, that’s gonna be a roadblock to building savings.
Heard of the snowball method? The avalanche method? There are plenty of ways to tackle paying off your debt, most of them strangely snow-themed.
We have a whole article written by our resident financial advisor, Anna Yen, if you want professional advice on exactly how to tackle your debts.
#8 Be careful of Buy Now, Pay Later services
If you’ve read any other Cleo blogs, you might be aware of our feelings about Buy Now, Pay Later services. They are the final boss in our quest to improve the world’s financial health. Along with predatory overdraft fees… and shady payday loans…
After taking a few calming breaths there, we’ll just say that Buy Now, Pay Later services make it super easy to burn through money, in a way that’s disconnected from how much you actually have to spend each month. In fact, they’re posing a major risk to Gen Z’s financial health.
So if you are going to use them, check out our article on how to do it safely.
#9 Take on a side hustle
If you’re looking to increase the speed you save money, and you have a little extra time, you can supplement your income with a side hustle.
There are ways to supplement your income without it feeling like work - like by walking someone’s dog for them or scheduling their social media posts.
Here are a few possible side hustles that we have guides on:
- How to make money with Depop
- How to make money with Audible
- How to make money on Etsy
- How to make money on Social Media
- The top 5 side hustles for single parents
#10 Celebrate your wins
You’re all set to start your journey toward financial health. But don’t forget to celebrate your wins along the way. You’re doing the best with what you have! During a literal financial crisis!
If you type “hype me” into the chat with Cleo, she’ll show you all the good you’re doing. And if the whole money thing is really getting you down, we have an article full of mental health resources for money-related stress.
You’ve got this. Cleo’s got your back.
There’s only one thing left to do…
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Big love. Cleo 💙