If you read the title of this article, you probably think that it has a negative connotation. You might think that “living paycheck to paycheck” is for those that are struggling just to survive. However, living paycheck to paycheck is actually a sound financial process, especially for college students. If you want to be in a good financial situation and avoid excessive debt, then you have to be cognizant of your income steams and your expenses. Looking at your financial situation bimonthly (assuming most of your income comes in a bimonthly paycheck) is a great way to budget your finances responsibly.
What are the benefits of living paycheck to paycheck? The following list presents just a few:
- Budgeting on a recurring small time frame (every two weeks) makes it more manageable. Budgeting can be an overwhelming activity. If you only take your income and expenses for a two week period, the numbers you are working with will be more manageable. This will make the budgeting process a little less stressful.
- If you are constantly monitoring your budget, you will be less likely to spend more money than you are earning. College students most likely have a large amount of expenses, so it is imperative that they understand their financial situation so they can make the best decisions.
- To tie into the above point, people who budget bimonthly will be less likely to spend money on frivolous purchases. It is unfortunate, but the “fun and entertainment” category of expenses is the first category that should be cut if necessary. Budgeting will show you if you are spending too much money on frivolous purchases.
- Constant budgeting could also help you analyze spending habits that are inhibiting your health. For example, not only is smoking harmful to your health, but it is an incredibly expensive habit. Seeing how much you spend on cigarettes might be the final push you need to quit.
Do not let the phrase “living paycheck to paycheck” embarrass or scare you. It is a sound financial practice to constantly monitor your budget. Your life is not static, so your budget should not be either. Constant budgeting allows for more flexibility and analysis of your spending and earning habits.
By Ryan Laspina
Senior Specialist, Red Flags and External Reviews at APUS