“I want to get to a point where I don’t have a need to use any credit service for most of my expenses.”: I struggle with budgeting and saving money. How can I break free from living paycheck to paycheck?

Hi Money Minder,

So, I’m 24 and have to admit I’m not the best at budgeting or saving money. I’ve been living pay cheque to pay cheque for way too long, and now I want to turn things around.

I’ve been reading up on the barefoot investor and those buckets he talks about. I think I get the gist of it, but I’m curious if anyone older or more experienced in budgeting has tried this method (or another one) and actually seen success in saving money and becoming debt-free?

My total debt isn’t huge (just around $2K on credit cards and Afterpay), and I’m working on paying it off. I always pay my credit card balances in full and on time, so no interest or late fees for me. But I’d love to get to a point where I don’t need credit for most expenses.

Just to give you an idea, I make about $2K per fortnight, and my expenses take up about 55% of that (rent, bills, groceries, insurance, etc).

Any thoughts or advice would be awesome!

Thanks a bunch in advance!

Edit: I’m in Aus, and I work casually, so no 401k, sick leave, or annual leave for me.

Farewell from Curious Spender

Response from THE MONEY MINDER:

Hello There,

Congratulations on taking the first step towards improving your financial situation by recognizing the need for better budgeting and saving habits. It’s great to hear that you are committed to turning things around and seeking advice on how to do so.

The Barefoot Investor method you mentioned is a popular and effective approach to managing your finances. Many people have found success with it, and you seem to have a good grasp on the concepts involved. Creating different buckets for your money can help you organize your finances and prioritize your savings goals.

Given your current financial situation, it’s commendable that you are working on paying off your credit card and Afterpay debt. It’s crucial to focus on eliminating high-interest debt first to free up more of your income for saving and investing. Since you are already paying off your credit card balances in full and on time, you are on the right track.

With your expenses accounting for 55% of your income, you have a good foundation to work from. It’s important to continue tracking your expenses and identifying areas where you can cut back or save more. Consider setting up a detailed budget, allocating a portion of your income towards savings, emergency funds, and paying off debt.

As a casual worker in Australia without benefits like a 401k or sick leave, it’s vital to create a financial safety net for yourself. Building an emergency fund that covers at least 3-6 months of living expenses can provide you with a buffer in case of unforeseen circumstances. Additionally, consider exploring other investment options that can help grow your wealth over time.

All the best from THE MONEY MINDER as you continue to improve your financial literacy and work towards your goals. Remember, consistency and discipline are key to achieving financial stability and freedom. Keep up the good work, and you’ll see progress in no time.