Are you living paycheck to paycheck? If yes, then you are already in a financial crisis. Living paycheck to paycheck reflects that you are not able to manage your monthly financial obligations.
However, don’t be scared. You just need to break the cycle of living paycheck to paycheck. There is more than one way to get rid of distressed finances every month.
The person who is living paycheck to paycheck is either a spendthrift or a low earner. So, to break the cycle, you have to learn to live on less and increase your income simultaneously.
Here’s how you can do it
1. Start following the budget right now
To stop living paycheck to paycheck, you need to start following a budget as soon as possible. It will help you to keep a close watch on your monthly income and your expenses. Most people in the US hate to follow a budget as this puts a restraint on their spending ability. But most of them are not aware of the fact that budgeting is the secret to financial freedom.
2. Keep household budgets in order
Once you create a budget system according to your financial ability, you can manage emergencies, save money for the future, and make some additional expenses. A budget also teaches how to overcome the bad financial phase as well. Once you start following a suitable budget, you’ll be able to know the amount you spend and the amount you save. Thus, you can save more after meeting your daily necessities.
3. Take advantage of free budgeting tools and apps to form a budget
Budgeting is not as scary as many people think. Many budgeting tools and apps are available online. If budgeting sounds dull, then install the free app on your smartphone and start using it. Soon you can see the positive result in your personal financial health.
4. Restrict the usage of credit cards
By restricting the usage of your multiple credit cards, you can easily restrict yourself from incurring further debt. The more you buy things with credit, the more you’ll dig yourself deeper into the credit card bill. Keep your card at home so that you don’t get the temptation of using it. Instead of credit, use cash so that you can stop shopping as soon as your cash is exhausted.
Also, pay your credit card bills in full and within time. Try not to incur credit card debt. Otherwise, you will not be able to save money on your paycheck.
5. Cut down on extra costs
To save money, you need to cut down unnecessary expenses. To stop living paycheck to paycheck, you need to save at least 10% of what you make each month. To do so, you have to cut down unnecessary expenses.
Avoid spending money on fast fashion
Go to a small store rather than a large one to buy your clothes. Instead of following the latest trend, make your own fashion statement. Buy jeans and T-shirts of bold color and use them for casual wear. You can also buy a black evening gown as this color never goes out of fashion. Keep a close look at the offers and discounts at your nearest stores and grab the opportunity of buying clothes at a cheaper cost.
Cut down on entertainment expenses
Curtail your entertainment expenses like the cable bill, movies, and expensive magazines, and save a royal share of your hard-earned money. Try to be a little creative and find entertainment in flying kites, playing soccer, and going for an evening walk. You can also spend time with your friends and family at home along with some delicious snacks.
Cut down on extra food costs
Try to change your food habits and save some amount of food. It is advisable to carry lunch at work instead of having food from outside. A sandwich can cost you around $20. So, if you carry lunch from your house, you can save $20 a day, which means $600 a month. Shop your groceries from small stores rather than large ones and keep an eye on offers and discounts. Also, gather discount coupons and carry them along while going shopping.
Avoid going to expensive restaurants
Most people love to eat out in fancy restaurants. But, too much can be unhealthy for your wallet. A lavish dinner/lunch at an expensive restaurant can cost you nearly $2,000 a year. Instead, you can enjoy a homemade meal to save money. If you can restrain yourself from eating out at an expensive restaurant, you can save thousands of dollars a year.
6. Ask for a raise or do a part-time job
If you’re working hard and performing well in your workplace, then this is the right time to ask for a raise. Approach your employer in the right way to get paid according to your capability. You can also consider a side hustle to boost your income. Go online to get ample ideas.
You can also boost your income by doing a side hustle. It will help you to earn more.
7. “Saving money” should be the only goal
Save, save, and save. No matter what amount, but consistency is required. Try to start small. It will help you to balance other mandatory expenses. With time you will be able to save enough money.
8. Be positive
Following a budget and saving money requires some lifestyle changes. So, you need to keep patience and stay motivated while making changes in life. It is better for you to set a goal and try to achieve that. If you set a goal, you will always have that working in your mind, and you will constantly strive to achieve that. Once you are able to achieve the goal, you can reward yourself.
Lastly, there is no such rule or “Mantra” for breaking the paycheck-to-paycheck cycle. Living on less, changing lifestyle, and following a budget makes a difference over time. If you lose your patience while breaking the paycheck to paycheck cycle, talk to a financial advisor for support and motivation. Remember, with determination, you can start saving and the financial difficulties that you always had at the end of the month will go away.