BATON ROUGE — Living paycheck to paycheck can feel overwhelming, but financial experts say taking control starts with understanding where your money goes and making a plan before stress takes over.
Kim Chapman, Financial Wellness Director with Neighbors Federal Credit Union, says the first step happens before you spend anything at all.
Start with the basics: income and fixed expenses
“The first thing that we want to do is look at what you need to pay for that paycheck before you even spend a dime,” Chapman said. “We want to look at how much is the income, and then what are the expenses, the fixed expenses.”
She says those are the costs that stay mostly the same every month, things like your mortgage/rent, vehicle loan and utilities.
“Those things that are pretty consistent month after month.”
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Smart Money Tip: Track what you’re spending
Chapman says many people underestimate how small daily purchases add up.
“Track your spending, know where your money goes. Sometimes a little accountability goes a long way,” she said. “When we can sit down and look at exactly where our money is going, we can take control, have control and say, hey, this is a good plan. I am doing the best that I’m doing. Or, my God, I did not realize that I was spending $45 just on coffee in the morning.”
Ignoring financial stress only makes it worse, she added.
“Avoid ignoring the situation because it’s not going to go away. So looking at what you can pay will give you a sense of control and it can release some stress because at least you know what you can do. You know what you can’t do.”
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Smart Money Tip: Take care of the “Big Four” first
If money is tight, Chapman says priorities matter.
“If you’re to come up short, make sure you’re taking care of those big four, even five. I say the four walls, right?” she said. “You want to make sure you take care of your rent, your mortgage. You want to take care of utilities. Make sure you have food and make sure you have transportation.”
In some cases, she adds, medication may also fall into that essential category.
“So I like to say make sure you’re taking care of those first. Everything else can come secondary to that.”
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Smart Money Tip: Communicate before you panic
Chapman warns against quick fixes that can create bigger problems later.
“Next, you want to get on the phone. Contact those individuals, those companies or creditors that you can’t pay and see if you can get extensions,” she said.
She cautions against high-interest payday loans.
“What you want to avoid is maybe that knee-jerk reaction and go to like some high interest payday loan company that may not work out for you in the long run,” Chapman said. “It may fix it this week, but if you don’t have a plan of how you’re going to pay that off next paycheck, that usually can start a snowball effect of making a bad situation a little worse.”
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Smart Money Tip: Start small with savings
For people barely getting by, Chapman says realistic goals matter more than big numbers.
“If you’re barely getting by, start with the first couple of hundred dollars,” she said. “What you don’t want to do is set an expectation so high as our recommended savings of three to six months of our living expenses.”
That kind of goal can feel overwhelming.
“That can seem like a really tall mountain to climb and then we self-sabotage thinking we’ll never get there,” Chapman said. “So if you have no savings, start with a hundred dollars and then get to that baseline of at least $500.”
She says that amount can help cover common emergencies.
“A flat tire, maybe a trip to the ER, $500 at least is a good, comfortable amount that can take care of those small, unplanned things.”
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Smart Money Tip: Free help is available
Chapman says people don’t have to figure this out alone.
“At Neighbors, we offer free, and I have to stress free, financial counseling,” she said. “Because if you think about it, if somebody’s in a financial situation, can they really afford to go and pay somebody to give them some guidance?”
Through Neighbors’ Blueprint for Financial Success program, counselors help build a plan around personal goals.
“We sit down with you and listen to what your goals are and help you create a plan.”
And Chapman says the biggest hurdle is often mindset.
“Reach out to Neighbors, set up that appointment. You have nothing to lose other than kissing paycheck to paycheck lifestyle goodbye.”
Click here to start your Blueprint for Financial Success.
Editor’s Note: This article is part of a sponsored segment paid for by Neighbors Federal Credit Union.
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