When you have a seemingly endless list of bills to pay and financial responsibilities to take care of, it can be tough to make sure there's enough money to go around.
The average American is struggling to make ends meet each month, with 59% of U.S. adults saying they live paycheck to paycheck, according to a recent survey from Charles Schwab. Furthermore, nearly half of survey participants say they carry credit card debt and struggle to keep up with the payments.
If you're having a hard enough time paying the bills and putting food on the table without racking up debt, saving for the future is probably the last thing on your mind. Only 38% of people have an emergency fund, according to Charles Schwab, and one in five Americans don't have a dime saved for retirement, according to a survey from Northwestern Mutual.
However, although many people are living paycheck to paycheck and struggling to save, there's one mistake you could be making that's hurting your financial health.
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Think you have nothing to save? That may not be the case
Despite the fact that the majority of Americans say they're living paycheck to paycheck, the average person spends $483 per month on non-essential expenses, Charles Schwab found.
It's easy to let your spending get out of hand, especially if you're not tracking your expenses to see where your money goes. It may feel as if you're stretching every dollar and can't afford to set any money aside in your retirement fund or savings account, but you're probably spending more than you think on things you don't need.
To get a clearer picture of exactly how much you're spending each month and what you're spending money on, start tracking your expenses and create a budget. These days, it's easier than ever to track your spending, and there are several apps that will do it for you.
Once you have a list of all your expenses, the next step is to categorize them by importance. Break these costs down by whether they're truly necessary and whether you have the ability to lower them. Some costs, like your phone bill, might be necessary, but you may be able to shop around to find a better deal and save some money each month. Other costs, like your mortgage, aren't as flexible.
When it comes to non-essential costs, be honest with yourself about how much you can afford to spend. If you can't live without your morning latte or takeout once or twice a week, that's OK -- you don't have to completely eliminate it from your budget. In fact, sometimes it's beneficial to splurge every so often, because then you're more likely to stick to your budget. If you slash everything but the bare necessities, you may give up after a few weeks and go back to your old frivolous ways. At the same time, if you're struggling to pay your essential expenses because you're spending too much on non-essential costs, you need to make some cuts somewhere.
How to save more money on a tight budget
If you've already trimmed the fat from your budget and you're still struggling to come up with enough cash to pay your bills and save for the future, you need to take more drastic measures.
First, figure out your biggest challenge when it comes to saving more money. Is it because you don't have enough cash to pay all your essential bills and still sock away savings? If that's the case, see if it's possible to pick up a side hustle, and put that extra cash toward your savings. Not everyone can simply find another job, but sometimes something as simple as walking dogs in your neighborhood or selling your used clothing online can help you earn a few hundred dollars per month -- which goes a long way when you invest it for the future.
On the other hand, if your struggle is keeping your spending in check so you don't go overboard on unnecessary costs, try to come up with a way to hold yourself accountable. Sometimes, that's as simple as setting spending limits for each category of your budget. If you're using an app to track your spending, you can set limits for yourself and see how much you have left to spend in each category every time you log in.
Also, if your goal is to save more for the future, make saving a category within your budget. If you treat saving as another bill you have to pay, you'll be forced to save at least a little each month. Even if you can't save much right now, it's good to get into the habit of regularly stashing some money away. See if you can automate your savings every month.
Setting money aside for the future isn't the most exciting way to spend your paycheck, but it is crucial if you want to save for retirement and prepare for any unexpected expenses that will inevitably arise. It may seem like an impossible task to save more if you're living paycheck to paycheck, but with a few sacrifices and strategic spending techniques, it's easier than you may think.
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This article was originally published on Fool.com