How to stop living paycheck to paycheck
Almost 75% to 78% of the adults live by the paycheck to paycheck lifestyle. You will be surprised to know that these are not just lower earners. So, How to stop living paycheck to paycheck.
Good evening Moneyistas,
Did you know that, 1 out of 10 individuals who live paycheck to paycheck earn more than $100,000 per year. This type of income should give you more room to breathe but they are not ready to manage things.
The paycheck to paycheck lifestyle is not healthy and reliable for you because it comes with various issues. The moment you cut your hours or an unplanned expense sneaks up on you or you lose your job.
You will risk falling behind on your bills that will start a dangerous cycle of credit zipping and costly debt. It will be harmful to your health if the financial issues are keeping you up all night and it is causing stress.
A paycheck to paycheck lifestyle means that you are constantly struggling to make your ends meet. You will easily run out of money before the end of the month. It makes you feel like you never have enough money to cover for your expenses. However, the truth is that you are unable to manage your income properly. This is the reason no matter how much you earn, you will always feel like you do not have enough.
With a paycheck to paycheck lifestyle, you will not be able to get ahead financially. It would be hard for you to even handle an emergency of $500. You will easily overspend each month which means that you will end up with more debt.
If you prefer to use the debit card it may be hard for you to stop living paycheck to paycheck but it is not impossible. Here we have some of the tips that will help you out in the process.
Get rid of debt and stop using your credit card
The use of credit card is common these days. There are many people who have a credit that has a limit more than their total income. That is why they are dealing with a serious type of credit card debt issue.
There are more individuals who are in the credit card debt as compared to those who are dealing with student or mortgage loans. In order to stop living paycheck to paycheck, it is important that you get rid of the debt because most of your income goes into paying the debt.
The first change that you have to bring is to stop using the credit card. The only way you will be able to reduce the credit card debt is by stop using it.
If you will keep using a credit card your debt will keep adding up and you get to remain in the debt cycle. You have to keep your credit card at a side to assure that when you will not see them.
When you will not have the credit card in your purse while going shopping you will not have to urge to use it. In this way, you will not be able to increase your debt and it will allow you to get rid of the previous debt easily.
Cut back on your spending
Once you are free from all your previous debt the process of saving money will start. In order to begin you first have to cut back on your spending because it is the first step to stop living paycheck to paycheck. Here are some of the things you have to consider to make it possible.
- Look for all the products that are extra in your house. There may be various items in your wardrobe or garage that you are not using anymore. Assure that you sell all of them on eBay to have some extra money.
- Do you really have to go shopping twice a month? It is better that you avoid going on shopping because it is making you spend more than you usually have to.
- All the memberships to clubs and sports that you do not need, cancel them. If you think sports help you stay fit, try going to a gym or for jogging in the morning. It is a better option for you.
- You are craving for the latest headset introduced in the market. Just wait and think that do you really need it, NO you do not. Your previous one is working just fine and there is no need to get another one. On new updated cell phone.
These are some of the ways you can cut back on your spending and assure that you save as much money as you can.
Learn to create a budget
A common mistake that most people make is they do not have a budget. This is the reason they are unable to manage their income. It is important that you create a monthly budget and stick to it.
A better solution is to assure that you select an allowance that you are going to use per day or per week.
When you will stick to the allowance that you have it will get easier for you to save money. Always pretend that you earn less than you actually do. It will help you save money in the long run.
Do not wait for bonuses
There are many individuals who work really hard and that is why at the end of the month they get some extra bonus. If they will get a bonus for a few months continuously they think that on working hard they will get extra money.
It is good that you get a bonus but do not make the mistake of relying on the bonus for paying the extra bills or dealing with the debt.
The reason is that you may be hoping to get the bonus but due to an emergency your employer decided to cancel the bonus, it will create an issue for you.
It will get hard for you to manage the cost-effective and you will not be able to deal with the bills that you were planning to pay with a bonus. You have to manage everything strategically because that is the only way you will be able to manage your income.
Save 20% of your income
One of the most important changes that you have to bring in your life if you want to stop living paycheck to paycheck is that you start saving.
It is essential that you save at least 20% of the money that you earn every month.
The reason is that it will give you the satisfaction that you have emergency cash available at the time that could be easily consumed when any kind of issue arises.
As well as this money that you are saving can help you generate some profit from it.
There is various kind of investment opportunities available in the market. You can easily select the option that you know would help you generate more profit than you have invested.
In this way, you will make some extra money aside from the income that is coming from the job or business that you are doing.
Make sure that you wisely select your investment option. Do not select any market that has 50-50 chances or winning or losing.
No doubt there is a risk in all types of markets but you have to select the one that comes with the lowest possible risk.
Save your raises
If you are lucky you will surely get a raise from your office. It can be a bonus, promotion or any other type of raise. In this situation, it is important that you start saving your raise instead of upgrading your lifestyle.
If you are already living a normal life without any financial disturbance, changing your lifestyle only for a raise will not be a good decision.
It is better that you start saving the extra money that you are earning. The reason is that it will allow you to save a lump sum of money.
If after a few years you plan to buy a house or invest in another business, you will have enough money to invest that you will not have to worry about applying for a huge loan.
Even if you want you can take a small loan that would be easier for you to manage and you will not have to deal with the debt cycle.
Take help to stay committed
If you have been living the paycheck to paycheck, it will get hard for you stop because most of the things that you were buying carelessly will not be available for you anymore.
Such changes will make it hard for you to stay committed to the process.
It is better that you take some extra help to assure that you can stay committed.
There are various high-tech applications available that will help you in the process.
The apps will help you manage your budget effectively and you will not be able to spend money on useless products. As well as there are also some apps available that have information related to all types of deals.
You will be able to save money while you are shopping online or buying a product like a TV or another big item.
Make sure that you get rid of the paycheck to paycheck lifestyle as soon as possible. That is the only way you will be able to maintain a financially strong and healthy lifestyle.
You are responsible for your own life. You can do this. It will be hard. But, you will live a happier live once you do.
How to stop living paycheck to paycheck
Author Derrick Carr.