Living paycheck to paycheck…..hmmm does this sound familiar? I did it for years until I got tired of the insanity. There are a few reasons why one lives paycheck to paycheck that readily comes to mind. Either it really does take every dime one makes just to get by OR one wastes a lot of money on stuff they could actually live without. Most of the time it’s the latter. So…..why do people literally waste tons of money? Looking back on it, I’m not quite sure what my excuse was. I think I just wanted anything and everything and didn’t care what it cost. If I wanted a new car I would have one. For that matter, whatever I wanted for the most part I would have. I also think the way you’re raised has a ton to do with it. For instance if you were raised poor, chances are once you grew up and started making your own money you might tend to buy things just because you can. Trying to make up for lost time so to speak. Does that make sense or am I reaching here? Or maybe it’s a cultural thing. Humans tend to do what they see other humans doing. On TV you see people driving new cars and living in amazing houses so we feel like we’re supposed to as well. Not that that’s wrong but only if you can afford it. We seem to push our paychecks to the limit and not even think twice or think about the consequences. I’m totally guilty because I did this for years. Now I’m older and wiser but guess what? My savings accounts and retirement accounts are lacking.
When you live paycheck to paycheck, you are constantly scrambling to make ends meet or running out of money before the end of the month. It can be stressful because you feel like you never have quite enough to cover all of the bills and pay for the things you want throughout the month. When you are living paycheck to paycheck, it is nearly impossible to get ahead financially. You are not planning ahead or setting money aside to cover the bigger expenses. You may not be able to handle even a $500 emergency. Often you end up overspending each month, and you run up a little bit more debt each month. It is important to stop living paycheck to paycheck so you can begin reaching your financial goals. If your employer is paying you with a prepaid debit card, it may be even more difficult to stop living from paycheck to paycheck, but you can do it. These steps can you help you start thriving financially.
Learn to Budget
The biggest thing you can do is to learn to budget smart and effectively. Anyone can write down a monthly budget. It takes just a few minutes, and there are several different approaches you can take to come up with your budget. But writing down a budget and actually budgeting are two totally different things. When you are budgeting smart and effectively you are tracking your spending, and stopping when you run out of money. Pretty much common sense huh?
An effective budget has all of your expenses built into to it, so you are not taken by surprise when your car registration and taxes are due or when you have to pay your insurance premiums. It also helps you deal with fluctuating bills, like higher utility bills in the winter. This is the biggest step in order to stop living from paycheck to paycheck. It can also stop you from having periods where you go crazy with spending and end up blowing all of your money for the rest of the month.
Cut Back on Your Spending
Once you have established a working budget, you need to begin to cut back on your spending. This will free up money for you to get out of debt and to put into an emergency fund. Once you pay off your debt, you will have money to spend each month. The challenge in the beginning is to find ways to save in nearly every category. As you get better at saving, you will be able to find even more ways to save and speed up the process. This really works! I have faith you can do this!
The key to cutting back is to challenge yourself to spend $50.00 less a week on groceries or an amount that is line with your budget. If you work on cutting back in increments, it is more manageable and you will be more likely to be successful at cutting back. Instead of completely slashing one category, try reducing spending in several categories by $10.00 or $20.00 a month. This will add up quickly, and you can try to cut back more the next month. You have to really want this and be serious about getting your financial life in order. YOU CAN DO THIS!! I know, because I did it!
Set Money Aside Each Month
The biggest way to stop living from paycheck to paycheck is to have money in the bank. You can do this by putting money aside each paycheck. For your initial emergency fund, save up between $1,000 and one month’s worth of expenses. Once you have gotten out of debt, you can begin building a larger emergency fund. Notice I keep referring to getting out of debt? This emergency fund is the key to stop living from paycheck to paycheck in the long-term. When you have a year’s worth of expenses in the bank, you no longer feel the same worry and pressure as you deal with life’s challenges. Even if you start with just $50 a paycheck, you will start to feel more confident about handling your finances.
Be sure that you don’t dip into your savings once you begin setting it aside. If you know that you will be tempted to dip into your savings, consider making it harder to do this by opening an online savings account or putting the money in a separate bank. If you know that it will take two or three days or an extra trip to a bank to access the money, it can help you stop your impulse purchases, since it will take additional time to access the money. But seriously? Aren’t we grownups here? LEAVE THE DAMN MONEY ALONE! Let it accumulate! Dig out of the hole you’re in!
Get Out of Debt and Stop Using Your Credit Cards
Another way to stop living from paycheck to paycheck is to get out of debt. This is a must! DEBT SUCKS AND MAKES YOU A FREAKING SLAVE! This debt is eating up a portion of each paycheck. It can hold you back from doing the things you want to the most. You will not get out of debt if you continue to put money on your credit cards. You need to stop using your credit cards until you are completely out of debt, even if you believe the rewards are worth the credit card. This will help you to really control and monitor your spending. The money you’re spending on debt each month is money you could be banking!
Your budget will help you find the extra money you need to put towards your debt each month. Avoid taking out a car loan or other types of loans until you have paid off your debt completely. Your emergency fund can help you pay for car repairs and cover other unexpected expenses so that you no longer rely on your credit cards to get out of a tight situation. If you want to speed up paying off your debt, you may want to take on an extra part-time job. Put all of the money you make at it toward your debt. Once you are debt free, you can quit the job and be in a better financial situation. It’s all in how bad you really want it. If you pussy foot around it, YOU WILL NEVER SUCCEED! Buckle down and do this! Secure your future!