How to Make the Most Out of Your Paycheck

Few things can bring as much joy to a teen or young adult as a paycheck. Most people who are about to get their first check will go and multiply their hourly wage by the number of hours they worked to estimate how much money they're about to bring in. Then, reality sets in. Taxes and other deductions take a serious bite out of every dollar earned. The more a person makes, the higher these deductions tend to be. This means that your paycheck is likely to be smaller, and maybe much smaller, than you might expect. That's why you'll want to make the most out of it.

Save Something from Every Check

The first thing you'll want to do is put a little bit aside out of every single check. By having some savings set aside, you'll be prepared if you have an unexpected emergency expense pop up, such as a medical emergency. While you are building up your savings to cover unexpected events like this in the future, applying for an online loan now can help you through the short-term financial emergency so you can get your savings back on track.

Cut Your Expenses

Cutting any interest expenses you might have out of your budget can help your paycheck go further. If have $250 going toward interest each month, paying it off would have the same effect as getting a $3,000 annual raise. If you eat out frequently, think about cutting back. Pack your lunch each day. Downsizing your car can cut down on your car payment, and it will likely cut your insurance rates in the process. There are many ways to cut back so that you can make your paycheck go further.

Look at Side Hustles

The gig economy is white hot. Some people freelance because full-time jobs can be scarce. If you have a solid job, you can make your paycheck go further by bringing in more money via a side hustle. Just a few hours a week could add hundreds to your bottom line on a monthly basis. Many people have started writing on the side. Others are into Internet marketing. Apps like Uber can also a way to bring in more money through the gig economy. Of course, there are more traditional side hustles like taking a job delivering pizzas or as a clerk at a local retail establishment. No matter which route you choose, more money can help you meet your financial goals.

Minimize Your Taxes

Most people don't realize this, but taxes are one of the biggest expenses they have. If your earnings are on the higher end of the scale, it's likely that you're paying a fairly big chunk toward the IRS each week. That's the bad news. However, there's good news. You can control how much you pay in income tax, at least to a point.

There are numerous ways that most workers can cut their taxable income. These options have the side benefit of adding to your net worth. Traditional IRAs, 401(k) plans and HSAs are all deductible from your taxable income. By reducing the amount Uncle Sam sees on your tax return, you get the full benefit of those tax-free or tax-deferred dollars. If you saved in a taxable account at a marginal tax rate of 12%, you'd only be able to invest 88% of those dollars. Tax-advantaged accounts allow you a measure of control over when you pay taxes and how much you have to pay. There are few ways to make the most out of your paycheck that will benefit you as much.

By employing a clear strategy that maximizes your savings and minimizes your expenses, you can stretch your paychecks further than you might think possible. Working on a side hustle or two can bring in a little bit of income that can go a long way toward building your wealth. Money doesn't bring happiness, but it can provide options.