Living paycheck to paycheck is actually a very common situation for many people in my countries and varying wage brackets. Depending on your circumstances, you may know exactly what it’s like to live on the paycheck cycle.
This statistic shows that many of us are not able to save enough for an emergency which can make you feel vulnerable.
Its not just you! Running out of money is a problem that many Americans have. Even people who earn well above $100,000 are often living paycheck to paycheck. This was identified by CNBC that nearly 1 in 3 American run out of money before payday when even earning over $100,000
Learn how to live on less than a paycheck so you don’t run out of money before payday again. When you learn how to stretch every dollar, you’ll soon be able to live on less and start to save for a rainy day.
What Is Living Paycheck To Paycheck?
Living paycheck to paycheck means having just enough or a little less than enough money to cover your monthly bills.
It leaves no room to save money.
Living paycheck to paycheck is a form of poverty and can cause many financial problems, such as an overdraft, credit card debt, or even mortgage defaults.
Tips to stop living paycheck to paycheck.
If you are living paycheck to paycheck, it is important that you try and take action to change the cycle. Living paycheck to paycheck is not a good way to live and we are going to give you some ideas on how you can help yourself to move out of the payday cycle.
Budget Budget Budget
I know you have heard it before but budgeting can change your life. You need to learn where your money is going, so you can learn what to spend and what to cut back on. You need to learn how to get a handle on your finances if you want to know where your money is going.
Make sure you check your finances thoroughly at least once a month. It’s important to review your financial statements regularly to ensure that there aren’t any money leaks happening under your nose, you’ll discover them quickly.
Your budget should reflect your income and your spending. As your income changes and as you need to make lifestyle adjustments, it’s important to adjust your budget accordingly.
You need to be a budget King or Queen it’s a mistake that many people make. There is an old proverb ‘Take care of the pennies and the pounds will take care of themselves and to me, it tells me to take care of the little things, which can then add up to much big things.
Learn to become frugal and identify little changes you can make to add up over time to make a difference.
Debt Reduction
Debt can be the biggest cause of living paycheck to paycheck and poverty and should be high up on your priority list when trying to stop living paycheck to paycheck.
Think about it for a minute. As you pay off your debt, your income is also going up. Sounds crazy. Firstly you are reducing the interest being added to the debt and as you are then freeing up money moving forward. Freeing up money from your paycheck.
If you have a big debt but are not motivated to tackle it, break it down or focus on your smaller debts. Once you see progress and more free money you will be motivated to focus on bigger debts. Before you know it you will be making huge changes to your life.
Once the debt is paid off, you will have more money to spend and can save the rest for a special reason, even for retirement or other essential large purchases.
Once you’re debt-free, the sooner you can stop worrying about money and start building savings.
Become Frugal
People have negativity around the word frugal but it can make a big difference in small budgets and can stop your expenses increasing.
Its very easy to start spending more when you free up cash, or even get a payrise or create yourself a side hustle. Frugality and budgeting work hand in hand and are essential to stop you living paycheck to paycheck or enabling you to save for the dream. Understand what frugal means and how you can use it for your benefit.
Frugality To Financial Freedom and part of your FIRE method.
Don’t let additional money generated be slowly swallowed up.
Clear financial goals
Financial goals help you stay focused and make you more conscious about your spending. Having financial goals will help you stay focused, making it easier and clearer the reasons why and what you are planning on achieving.
One of the reasons so many people become financially independent and grow their wealth is simply by being consistent in their financial goals.
Set goals that are realistic and that challenge you each day to get out of your current work environment, but set goals that will also motivate you to do more than just get out of your paycheck to paycheck cycle.
Create additional income where possible, and try some sort of side hustles to make extra income on the side.
Remember if you don’t know your financial goals, then you can not plan how to get there. If you don’t know your destination or what your plans are, then you won’t know how to get there.
Building Emergency Fund
S**t happens and big things break, we get sick and they don’t seem to worry if you can afford it or not. An emergency fund is very important for everyone to have, I know its fine me saying this and can be very hard to do.
If you do not have any money saved up to cover for any of these unfortunate emergencies that can happen in your life, it will set you back financially. In this economy, if you live on a paycheck to paycheck, you have to look at ways you can get a loan which could come with hefty interest rates and put you under even more financial pressure. Even worse resorting to credit cards come with huge ongoing costs.
If you’re in a financially difficult situation, it’s especially important to have an emergency fund to help you during this time.
Plans and Dreams
Plan for the future. If you don’t have plans and dreams you have nothing to aim for and a reason to make changes. I call it my “hope” if you don’t have hope it can be difficult to keep fitting when life is tough.
Think about retraining, learning a new skill, gaining experience and looking for a new job.
Do you dream of starting your own business? What is stopping you? Can you start building the business in your spare time?
How do you see your dream future? Do you want to retire early? Do you want to live a full-time vanlife, travelling and adventuring?
Have plans and dreams for your future self.
Stop Living Paycheck to Paycheck
I hope these tips to help you stop living paycheck to paycheck will help you on your journey to get your finances in order and move to financial freedom.
