From Paycheck to Paycheck, or Why is There Never Enough Money?


Let’s say your job search has been successful. You managed to pass a series of interviews and finally signed an employment contract with the very company for the very position you were seeking. You have agreed on a salary that is well within the market level. Everything was supposed to be fine, but again money is not enough!

Well, let’s talk about finances. After all, not only at work, but also at home you need important knowledge and skills, financial ones. Otherwise, you can live your whole life from paycheck to paycheck.

Tips on Financial Management for Salaried Employees

First of all, you need to understand where you spend your hard-earned money. You should calculate your personal (or family) budget.

1. Budgeting

– Determine monthly income. This includes absolutely all financial income (salary, commissions, bonuses, part-time jobs, government payments, additional sources of income).

– Analyze all components of income and make a plan for their possible increase (consider working for a competitor for a higher salary, seeking jobs with higher commissions, exploring government grants, leasing out an old garage or other unused assets, etc.).

– Identify and categorize expenses (fixed, variable, unforeseen). Fixed costs can be calculated accurately, while a certain amount can be allocated for variable and unforeseen expenses each month. You can, for example, calculate how many of these expenses you had last year, and then take an arithmetic average for one month.

– Formalize the budget visually with the help of tables or special applications.

– In the future, track income and expenses and adjust the budget if necessary.

2. Reduce Expenses

– Look for opportunities to save money (consider renting a place near the office or transitioning to remote work, bringing lunches from home, avoiding unnecessary purchases, comparing prices at different stores and suppliers, using coupons, certificates, promo codes, cashbacks, and various lifehacks).

– Save money where possible on regular fixed expenses (various services, mobile communication, internet, etc.).

– Reduce non-critical variable expenses (entertainment, emotional purchases).

– Sell unneeded possessions, especially those that require money for their upkeep.

One option to increase income while reducing expenses is to live or move to a low-cost region and work remotely for an employer in a high-paying region that offers competitive rates.

3. Repaying Loans

– Make a list of existing loans, credit cards with interest rates.

– Pay off all debts as quickly as possible, starting with those with the highest interest rates, such as credit card debts and other consumer loans.

– Avoid taking on new debts, except for a favorable mortgage. If you are not sure that you can resist the temptation to buy something, close your credit cards altogether. Use debit cards instead.

4. Start Saving

– Establish a “financial cushion” for unforeseen events (job loss, health problems, accidents or disasters), aiming for at least six paychecks to support your family in case of job loss within six months. Again, that’s just the minimum amount.

– Allocate a portion of each paycheck, ideally 20-30%, towards savings. If your income is limited, save as much as possible consistently.

– Diversify your savings across different accounts, currencies, and assets to mitigate risks. These may include cash and non-cash in the national currency, on several accounts, several deposits, in different electronic wallets, in several places (in different banks, different home safes). The same applies to savings in foreign currencies.

5. Start Investing

– Invest surplus funds after securing your “financial cushion” in various instruments like deposits, shares, bonds, cryptocurrencies, physical gold, real estate for rental, etc.

– Diversify investments to manage risk. Make a table of how much percentage of funds you will invest in each instrument and then stick to that. Regularly review and adjust your portfolio to maintain balance and avoid overexposure to a single instrument or industry.

– Before investing money in any new financial instrument, understand what it is, what nuances there are, and, most importantly, the risks. Do not pay attention to intrusive advertising from all sorts of “investment platforms” with the promise of huge earnings: most of them are simply scammers.

6. Protect Yourself and Your Loved Ones from Unforeseen Situations

Try, as much as possible, to insure yourself against various negative scenarios, even if they are unlikely.

– Obtain health and property insurance for yourself and your family.

– Prepare a will and powers of attorney to ensure your savings can be accessed by loved ones in case of incapacity.

– Safeguard savings and important documents in secure locations.

– Plan for contingencies and consider self-sustainable options like a fruit and vegetable garden for emergencies.

And a couple more comments.

Take care of your health and the health of your loved ones. This will not only improve your quality of life, but will also save you a lot of money.

Don’t be afraid to invest in your education and training, especially at the beginning of your professional career. By doing so, you will increase your value as a specialist and will be able to save the necessary amounts for your goals much faster.

And the salary – it will always be insufficient if you do not control your expenses. Even if you earn 10 times more. So income should be raised, and spending should be kept under strict control.

Best wishes for prosperous earnings and substantial savings!