The term “living paycheck to paycheck” is used to describe any financial situation in which there is no reserve money between pay periods. This can create quite a stressful situation, especially when unexpected expenses pop up. For some families this can be disaster. One emergency can send the budget into a tail spin which cannot be easily recovered from.

Living paycheck to paycheck is not a financial phenomenon affecting only the most poverty stricken, however. In fact it is a common practice for many families who have not planned ahead and disciplined themselves to certain financial boundaries. If you are currently involved in a Christian debt settlement program you already have the commitment and discipline to train yourself to live differently. So do you have to be rich to quit living pay check to paycheck? Absolutely not?

What is a Reserve?

A reserve is not the same as your emergency fund. Your emergency fund is separate money which is absolutely off limits unless a legitimate emergency pops up. A reserve is when you have money in your account in advance of your expenses. In other words bills are not piled up waiting for money to come in, but rather the opposite; the money is already sitting in the bank waiting for the bills to come in. Now this may seem like wishful thinking to some, but it can be accomplished, though for some it might come slower than for others.

Know Your Budget!

The first step is to know your budget inside and out. You cannot have any vague expenses. You must know down to the dollar how much you need each month to meet your expenses. Track spending as well as your bills. If you have certain bills that fluctuate drastically estimate that bill high so you’ll be sure to have it covered. If the fluctuations are dependent on your behavior then reign in that behavior in order to better control the bill. For example if you cable bill shoots way up because you order too many movies then stop ordering so many movies! Get that budget pinned down to within a few dollars. Become the master of these expenses.

Establish the Reserve with a Lump Sum

There are a few different ways you can establish a reserve. If you are expecting a large sum of money for instance an extra pay check, a bonus or an income tax refund you could set up your reserve very quickly. First, catch up any bills which are behind. Next figure out your exact monthly expenses. Take the amount you will need for the following month and deposit it into your account near the end of the current month. As the new month approaches begin paying your bills as they come in out of this reserve money. The money you will be currently making will be used for the next month’s expenses. So at the end of each month you will have one lump sum sitting in your account waiting for the bills to roll in.

Establish the Reserve without a Lump Sum

If you are not expecting a large sum of money any time soon, you can still start your reserve, but it will take more time and extra discipline. Each month choose one or two of your expenses, or as many as you can afford. Pay your bill on time if possible, but then also take the amount of that bill in cash and put it away in an envelope and leave it alone. Each time for the next few months, when you can take the full amount of one of your expenses and put it away in cash. You may have to take this out of your recreational money, but it will be worth it. When you have tucked away an entire month’s worth of expenses, deposit it into your bank near the end of the month. You have created an entire month’s reserve, and now any money you earn during the current month will sit patiently waiting for next month’s bills.

This practice will relieve your mind of a load of stress as it will be almost impossible to overdraw your checking account. You can relax knowing that you will have what you need when you need it.

If you do find yourself completely overwhelmed in debt, and you can’t seem to save a dime, you might be in need of some help. Fill out the blue box to the right of this article to get a free no-obligation quote today. You deserve to be free of your debts, and we’ll help you get there!