Depending on your earnings, living from one paycheck to the other does not have to be horrible. This, however, means that you are just one paycheck away from being broke. You should stop doing that if you can — if you are making a lot of money and spending it like it’s nobody’s business. Even if you’re not earning enough, you can and should do something about it. And this article will help you do that. Read on for details…
1. Start Living Within Your Means
Start living within your means! Yes, it is easier said than done, and you’ll have to rethink your monthly costs in order to make that happen.
If you want to stop living paycheck to paycheck, you’ll want to do a financial checkup, going through your most recent bank and credit card statements, and receipts to find the places where you can save. Do the math to find out how much you’re spending on groceries, clothes, fuel, utilities and other items. Then compare that number with your income and find places where you can trim costs.
Also, if you want to save, you will have to live below your means to have a fund for the rainy days. Cause sooner or later they will come.
Also read: 5 Ways to Live Within Your Means
2. Say “No” More Often
Related to the previous point, you will have to learn to say “no” more often. Yes, you may miss a movie or a fancy dinner, but if you want to advance in life, you will have to make some cuts here and there.
In contrast, saying “yes” to all invitations will keep you in the “paycheck to paycheck” mode. Personal finance expert suggest making a budget for everything, and when you reach earlier defined threshold, it’s time to say “no.”
Example: You can budget $100 for entertainment. Once you hit that number, you’re done for the month. You will still be able to entertain yourself at home, of course.
Also read: 4 Times When You Can Be “Selfish” With Your Money
3. Cut the Fat
And by fat we mean all the products and services you regularly buy but seldom (if ever) use. And which you can live without.
Do you go to the gym regularly? Which magazines are you subscribed to? How much are you watching cable TV? Those are all the places to look at to trim the costs.
On the other hand, think about how much money you spend on entertainment on a weekly and then on a monthly basis. Related to that, how often do you eat out and what’s the total cost of your coffee.
This exercise should help you find room for savings. Put it all on a paper or into a spreadsheet to get the complete picture of your expenses. And start cutting the fat.
Also read: 5 Ways to Save on Your Monthly Expenses
4. Shrink Your Debt
Debt is one of the key things that keep you enslaved to the paycheck to paycheck “lifestyle” — if we can call it that. The debt costs real money and sometimes it is useful, like when buying a home. In most other cases, however, you should try your best to avoid it.
Try not carrying too much balance on your credit card(s). Your goal should be to pay your credit card bill in full, every month. If that’s not an option, try paying as much as you can.
And the same goes to every other kind of debt. Avoid it, and if you already own something, the previous step of cutting the fat should help you save something extra to shrink your debt. Ultimately, you don’t want to own a single penny to any bank and/or any other loan provider.
Remember that the less you owe, the more you can save.
Also read: 5-Step Process for Getting Out of Debt
5. Start Saving
Once you get a grip on your debt, you should start putting money on the side. Let me repeat that: until you pay off all of your debt except for mortgage, you shouldn’t save — all your savings should go towards shrinking the debt. Then you’re ready to save.
There are any number of ways to start saving, and we suggest opening a savings account. All of the extra money you save goes there.
Go through your finances to determine how much you could save per week and then per month. From there, you can set up an automatic savings schedule and see your savings grow over time.
Also, you could set up more than one account for your savings, one of which could be an investment account.
Also read: 5 Major Mistakes to Avoid When Starting to Save Money
6. Create Additional Income
Even with all the expense trimming, you may not have enough money at the end of the month. You can, perhaps, get a second job to move beyond living from paycheck to paycheck.
There are many job opportunities out there, most of which don’t require rocket scientists. We have a page with a number of side gigs you can try to earn something extra every month. With some luck, you may be able to turn some of them into a new career. Or just to be able to put more money on the side.
Remember that earning an extra $30 per day could net you $600 per month, presuming that you work just 20 days.
Also read: These 20 Gigs Could Get You an Extra $500 per Month
Start Today!
You’ve read it all, it’s time to get busy. Read and re-read this article and come up with a plan. You are the only one that can prepare that plan. Put it all on paper or create a spreadsheet document to sum up all of your costs. Get a second gig if you have to. The process of moving beyond the paycheck-to-paycheck cycle starts today! Good luck, and make sure to share your successes and challenges with us. The comments form below is all yours…
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