For people who are still living paycheck to paycheck, payday is often an exciting and frustrating day — you have the brief pleasure of watching money roll in, only to have to part with most of it again thanks to bills and other expenses.
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Finance expert Ryan Scribner, author of the book “From Side Hustle to Main Hustle to Millionaire,” offered the five “smartest” things you should do with your money every payday to make sure you’re getting ahead.
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Act Like ‘The Richest Man in Babylon’
Scribner is inspired by a book called “The Richest Man in Babylon,” written by George Samuel Clason, originally published in 1926. In it, Scribner said, is a concept that many finance experts suggest, known as paying yourself first.
This doesn’t mean you take a wad of cash and blow it on nonessentials, however; it means that you take a small portion of each check and set it aside into your savings. For people who are still working their way up the income chain, Scribner said this could be a very small amount, as little as 1% of your paycheck. However, he pointed out that most experts recommend saving and/or investing between 5% and 20% of every paycheck.
You want to put this money into a separate savings account, and ideally a high-yield one, to build an emergency fund. Your first goal with that fund will be $1,000.
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Gas Up Your Vehicle
The next smartest thing to do, if you’ve got a gas-powered vehicle, he said, is to go to the gas station and fill up your tank. He said it’s not uncommon for people to pay bills and spend the extra between payday and Monday, only to put their next tank of gas on the credit card. Anything you can do to avoid putting basic expenses on a credit card is a good thing.
Grocery Shop, Don’t Dine Out
Scribner stressed that you can really blow a lot of money on eating out — even on fast food, which might seem to be cheaper, but really isn’t. While his video is several years old so the prices he used for comparison probably wouldn’t translate directly today, it doesn’t take much effort to realize you can save money by making most of the food you love to eat out at home.
Budget for Entertainment
One of the easiest things to overspend on is entertainment, of the sort that involves going out. While Scribner did not touch upon streaming services or online entertainment, you could still work out a budget for those. His suggestion was to take actual cash out of the bank and utilize the old school “envelope” method, whereby you put cash into an envelope and label it “entertainment.” Then, you don’t spend more than that. You could even save up this cash for a couple of weeks or longer for a “bigger” entertainment purchase (like a concert or sporting event).
Pay Down Debt
While paying down debt might sound obvious, his point is that many people put it off and continue to use their credit cards. There are many approaches to paying down debt, and he didn’t suggest one over the other, only that you pick what works best for you. One school of thought is to pay the highest interest debt off first because it makes the most financial sense. Or you could pay off the smallest amount first, say a Walmart credit card with a low balance, he said, and that gives you a feeling of accomplishment.
These practical steps on payday will keep you on top of your finances.
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This article originally appeared on GOBankingRates.com: The 5 Smartest Things To Do on Payday, According to Expert Ryan Scribner
