Having a constant paycheck routine can be the basis for your financial success. A paycheck routine is like a well oiled machine where your earned dollar is put to work for you rather than against you. A simple yet powerful tool that gives you the power to take the reins of control over your finances and create a financial freedom future.

Why a Paycheck Routine Matters

The life that we have here is very hard to imagine — full of surprises (both good and bad). You can find yourself in a financial mess because of unexpected expenses, job loss or medical emergencies. A paycheck routine is a safety net — it gives you a buffer to get through these storms. That is a proactive money management style that relieves the financial stress and anxiety.

Building Your Paycheck Routine: Step-by-Step

• Assess Your Income and Expenses: First, you have to know where your money comes from and how you spend it. All the income sources and what you spend your money on in a month. Find where you can cut back on this month (how much are you spending on housing, food, transportation etc.) and categorize your expenses.

• Prioritize Savings: Part of your paycheck should be made a saving non negotiable. Once your paycheck hits, automatically set up transfers to your savings account as if it’s a savings goal (retirement, down payment on a house, etc). Try and save at least 10 – 20 percent of your income.

• Budget for Bills: Allocate funds for your fixed expenses (rent/mortgage, utilities, insurance, debt payments) and set reminders so you don’t pay when the bill gets late holding you back from late fees and penalties.

• Tackle Debt: Paying off debt systematically is an idea if you have debt. The snowball (pay off smallest debts first) or the avalanche (pay off debts with the biggest interest rates first), are forms of strategies that may help.  

• Allow for Fun: Saving and paying bills should not be the only thing on a paycheck routine. There has to be some room for work and some also for play, and so forth. Part of your paycheck should be allocated for activities that will make your heart happy and keep you unstressed. It could be dining out, movies, hobbies or a weekend getaway. Budgeting for fun helps you feel as if you’re not depriving yourself, and makes your paycheck routine more sustainable in the long run.

• Review and Adapt: Situating things in terms of our basic stake in the economy, and recognizing that it’s dynamic, it shouldn’t just be static. Make this a regular review (monthly or quarterly) and do any changes that are necessary. Did you get a raise? Great, save more! Had unexpected expenses already occurred? Make cuts in discretionary spending.

Extra Tips for Paycheck Routine Success

Automate: Whenever you can, automate savings and bill payments so that they don’t require your involvement at all.

Emergency Fund: Try to create an emergency fund that lasts 3- 6 months.

Tracking Tools: A spending monitor for your budget through apps and spreadsheets to maintain track.

Set Financial Goals: Line up your paycheck regimen with your long term financial goals.

The Payoff

A paycheck routine is not a single way to go, rather it’s a framework where you can edit to fit your circumstances. From following these steps and tips, you can give your paycheck little terror and turn it into a powerful instrument amassing the capability and wealth for your bright and prosperous future.

Read More: Real Student Stories: How I Used My Credit Card to Travel, Save, and Thrive