STEP 8: Managing Money -
Action 4: Assigning Paychecks to Expenses

There are obviously many ways of managing money. The key is to know where your money is going at all times. One of the best ways to do that is to assign your paychecks to expenses.

You have already listed your expenses in the previous step, "creating a household budget", so you know what your monthly expenses are and when your bills come due. Our next "how to get out of debt" tip is to have a look at your paychecks. How often do you get paid? If you get paid weekly, bi-weekly or semi-monthly you can budget around your paychecks.

For example, if you are paid every two weeks, look at your list of expenses and see what bills can be paid on time from that paycheck. If you have allocated $400 per month for groceries, calculate how much you have to spend during that two week pay period. How much can you allocate to lunches, gas, car expenses and other items?

This may seem like a tiresome job, and it may take a couple of months to tweak spending plans to perfectly suit your family circumstances, but it is a very worthwhile exercise. It is important when managing money, to have a real understanding of where your money goes every month and what you can afford to spend based on money coming into the house. You don't have to do this exercise forever. After a while you will just know what you can spend and when you can spend it.

Many people like the online money management system called mvelopes, and have gotten fairly addicted to the ability to update it anywhere and track spending.

Traditionally, many people managed their money by dividing their cash into several paper envelopes. An envelope for food, entertainment, utilities etc. They then spent their money from these envelopes. They always knew how much money they had left to spend, and how long it had to last. Mvelopes Personal is a breakthrough in budgeting and spending management that modernizes this same envelope concept using advanced Internet technology for today's spending world.

It can be helpful to anyone who needs some budgeting assistance. We have a more detailed review of mvelopes here.

How To Plan Ahead For Large Expenses

How to get control of your personal budget.

Learn more about managing money in our next Debt Ditch Solution step that shows you how to improve your credit score.