Three Simple Steps: Making Ends Meet


Don't spend more than you earn: It's simple, fundamental, and one of the most important steps you can take to preserve your financial health. That holds true whether you're just starting out, are in the midst of a successful career, or are adjusting to one of the many curve balls that life can throw your way.

It's also understandable if you're a little worried about how to make all the pieces fit together successfully. It's incredibly easy to spend a little here and there without realizing it, only to wind up short on the cash you need to make the mortgage or rent payment. But with a little bit of planning and by making some careful choices, making ends meet can soon move from weekly worry to second nature.

3 Simple Steps for Success

Fundamentally, there are really only two key variables in the "making ends meet" equation: what you earn and what you spend. Making ends meet is simply the act of figuring out a way to make sure the money you have coming in from your earnings is larger than the money you've got going out from spending. With that in mind, here are three simple steps that can help you succeed:

1. Figure out where your money is going. Write it down with pencil and paper, track it in a spreadsheet, or use personal finance software like or Quicken. Whatever you spend, whether it's on a monthly bill like your rent or an impulse purchase from a vending machine, it needs to be included in your tracking. It's critical that you know where every dime of your hard-earned money is going if you want a shot at being able to consistently make ends meet.

2. Prioritize and adjust your spending. Once you have that list that shows you where your money is going, look over each expense and mark it as a "have to have," "like to have," or "can live without." The expenses you can live without become easy fodder for cutting -- simply tell yourself that it's something you'll consider bringing back into your life once you're reliably making ends meet.

For the remaining items on your list, look through them and ask whether you can figure out a way to spend less on them -- either by downsizing, buying in bulk, or by shopping around for better deals. You may be able to cut your costs dramatically without giving up the things you feel you really need. By this point, your expenses may well be low enough so that you can cover them with your income. If not, start cutting down the "like to have" items until your income and expenses are balanced.

3. Figure out ways to bring in more cash. If you have stuff you no longer need, consider selling it for a one-time infusion of cash. One-time money can go a long way toward helping you pay off debts.

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Once a debt is paid off, the principal and interest payments you had beed making will go away, which translates directly to money in your pocket, without affecting the rest of your lifestyle. While one-time money won't help you cover your month-to-month costs for very long, it can help you make a dent in your debt to free up cash flow.

For more ongoing cash, if you get paid hourly, taking on an extra shift here and there or working overtime will directly result in more money in your pocket. If you're salaried, moonlighting is a time-honored approach to bring in more cash. No matter how you earn the money, though, the secret to making sure that extra cash helps you make ends meet is to loop back to the first two steps to make sure your spending stays in control.

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If you're having trouble making ends meet, right now is the absolute best time for you to take that first step. Once you feel the financial peace of mind and the incredible stress reduction that comes from reliably covering your costs every month, you'll be glad you did. Best of all, you may very well start seeing the results of your efforts almost instantly, as soon as you get control of where every penny you spend goes.

Motley Fool contributor Chuck Saletta welcomes your comments. Try any of our Foolish newsletter services free for 30 days.