Money Smarts Blog

How to pay your bills and still save money

Feb 9, 2017 || Amanda Spurgeon

man worried about finances

Ever get a paycheck and it’s gone faster than you can say direct deposit? Ever have that happen 52 paychecks in a row?

If you’re consistently waiting for your next paycheck to make day-to-day financial moves – like filling up your gas tank or buying groceries – you’re probably living paycheck to paycheck. And if you’re living paycheck to paycheck, you’re probably not saving.

So how do you fix it? Sure, selling your plasma is an easy and only mildly invasive way to get a quick $20 when you need extra cash between pay days, but we’re talking about long-term solutions. You want to retire someday, or at least take a tropical vacation. Here’s what we recommend:

Put a cap on non-essentials.

If you want to improve your financial situation, you’re going to have to understand your current financial situation. Yes, I’m sorry to say that means actually opening your bank statement. If you really dread looking at it, that probably means you need to.

Figure out how much you spend and how much of that isn’t even defendable (like this writer’s $7/month New York Times crossword subscription, for example) and cut that out first. This doesn’t mean you can’t spend any money on anything fun, just think long and hard about that $25/month gift box subscription for your dog.

Consolidate, or at least snowball, your debt.

If you were lucky enough to graduate college completely debt free, congratulations. If you’re like most grads and left with at least some credit card debt and a lot more student loan debt, these paragraphs are for you.

If you’re paying late fees because you can’t keep track of all your due dates, or all of your interest rates are sky high, consolidation might help. Whether that’s transferring all of your credit card debt to one card or taking a consolidation loan with a better rate, many people find paying their debt is easier when there’s less to keep track of.

If your debt is (at least relatively) reasonable and your finances are otherwise manageable, but you’re struggling to figure out how to actually pay it off quickly, try a debt snowball. Pay only the minimum payment on all of your debt except the one with the lowest balance. Put all of your payment energy and extra payments into that debt until it’s paid off. Once it’s paid off, take whatever you were putting towards that debt plus any extra money and put it towards the next debt. Repeat until debt free.

Don’t use your balance as permission to spend.

So we’ve all done this, right? You want something – to go out to dinner or to buy an expensive new pair of shoes or whatever – but before you can spend the money you have to check your balance to see if you can afford it.

The thing is, if you have to check, you can’t afford it. Don’t even look. Step away from the makeup counter (or video games or whatever you spend your extra money on). Spending money on unnecessary things because you have a little extra cash is perpetuating the paycheck-to-paycheck cycle.

Don’t base your spending on other people.

We tend to assume that if our friend bought a brand new car with leather and heated seats and all that other stuff your old car doesn’t have, they can probably afford it. And that might make you want to start thinking about buying a new car, because if they can afford it, why can’t you?

Here’s the thing: most people struggle with money, they just don’t talk about it. So maybe your friend can’t afford that car either.

Keeping up with the Joneses (or the Kardashians, if you’re under 30) won’t do anything to improve your financial situation. If you want to believe that everyone you know can afford every lavish purchase they make, that’s fine. Just don’t use it as an excuse to make poor financial decisions for yourself.

Follow a budget that works.

You’ve heard this from us before. If your budget is too strict or too free, it won’t work.

We’re big fans of the 50/30/20 method.  It works like this:

50% of your budget goes towards necessary expenses, including your rent or mortgage, groceries, utilities etc. These are things you need to survive.

30% of your budget goes towards things that help you enjoy life – shopping, eating out, going to the movies or whatever else makes you happy. These are wants, and you could live without all of them.

20% of your budget goes towards paying down your debt – credit cards, student loans, what have you, and saving/investing.

This budget works because it includes fun stuff, and the important stuff. Oftentimes when we think of budgets we think of something boring and restrictive. And yeah, budgets are super boring, but they don’t have to be restrictive.


This is really hard for some people to hear, especially after all that talk about keeping up with the Joneses up there. We like the Joneses. They have nice things.

But if you have too many nice things they’re probably a large part of why you’re living paycheck to paycheck.  That’s why a budget like the 50/30/20 method is so important.

If 50% of your income is going towards just your rent or mortgage, there’s no way you can afford to have fun, pay your bills, get a new car and still save money.

If you’re serious about breaking the cycle and saving money you should consider trading your car in for a reliable, but older and less expensive vehicle, or changing your living situation to something smaller and more affordable.

If you stick with it and actually make some healthy financial changes, you might even find that your friends start making smarter financial choices once they see you succeeding.

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