5 Ways to Stop Living Paycheck to Paycheck
Over 50 percent of people working in the United States have reported living paycheck to paycheck. That percentage has only increased due to the global pandemic.
We ask you to be honest and answer a question: are you one of these individuals spending every dollar on expenses without saving for your future?
You aren’t alone if you answered yes, and the anxiety that the end of a pay-period brings can be alleviated. Ending this habit will help you find financial stability, care for your expenses without the stress, and build a more abundant future.
This is all possible and we are here to support your efforts. Continue reading below to find our top five methods of eliminating paycheck stress and enjoying life outside of the pay-period.
- Budgeting Is Key
All financial gurus share the same lesson that budgeting is crucial to maximizing your wealth and freedom. Tracking your expenses is key to ending the paycheck-to-paycheck habits you’ve built.
Without a budget, your spending behaviors go unchecked. This leads to confusion, regret, and complicated feelings around money. There’s always an apparent lack of funds, but you can’t trace your steps to see where your hard-earned money has gone.
Imagine a world in which you knew exactly where your money is going, what you can spend for each expense category, and how much you would be able to save each paycheck.
Creating a simple budget at the start of each month gives you the freedom to know your pay will cover your needs. It also helps you identify how a single check can go quite far! Sit down a few days before the start of the month and open a spreadsheet on your computer. Place categories for all your expenses, debt payments, and savings and fill them with the appropriate amounts. Don’t be afraid to make adjustments as the month goes on. Then at the end of the month, check in with whether or not you accurately projected what your expenses would be versus what you actually spent.
- Cut Costs
If your budget falls short and you need more funds for your most important categories, then it’s time to start cutting costs. This step can be painful as you must openly face where you’re overspending or what you truly don’t need. We promise cutting costs is worth it so that you can live with more freedom and security.
As you budget, some expenses are non-negotiable. You need to pay rent to have a roof over your head and grocery money to sustain yourself.
Cutting costs first comes with being honest about your necessities and identifying the needs versus the like-to-haves. You don’t need 3 different television subscriptions, spending hundreds on new clothes each month, or daily coffee runs.
Find a few different areas to cut when you sit and budget each month— 3 to 5 categories is a great starting place even if you decrease costs by $5. Those cuts add up quickly over the months and allow you to put that into savings or debt payments.
Now, you have a healthier relationship living within your means because you are developing the habit of eliminating unnecessary spending.
- Take Care of Your Debt
Debt tends to be a major expense category on many people’s budgets and takes a significant portion of a paycheck each month. A major method of ending the paycheck-to-paycheck cycle is to take care of your debt as efficiently as possible!
Let’s paint this picture for you: rather than paying off loans and credit card bills, you use that money to pad out your savings, invest for the future, start a retirement fund, and take that dream vacation you’ve always wanted.
We know that sounds pretty great, and we promise it’s accessible to you by getting yourself out of mindless money habits.
Your monthly budget should aim to pay off as much debt as you can comfortably cover from each paycheck. Use the additional money you have from cutting costs and put that towards debt payments. The snowball effect is powerful here!
- Build Savings
Living paycheck to paycheck creates consistent anxiety about the future – unexpected emergencies, missed occasions, and negative balances. Building out a savings account can bring the safety and encouragement you need to get yourself free from pay-period reliance.
Putting aside even a small amount each month means you can immediately start building for future needs, creating an abundant mindset, and getting out of negative money habits. These funds should be in a liquid account, meaning they can be accessed quickly if needed. They should not be placed in any account where it could be lost, such as an investment account.
The long-term payoff is massive when you create a positive, healthy view of your money and how you spend it. Pay yourself each month by putting away into a savings account and let us know how much freer you feel.
- Create a Long-term Vision
The final method to share as you break free of the paycheck-to-paycheck habits may be the most potent of all. Money can be overwhelming and intimidating for many. However, the vision you build for your future is far more powerful than any expense, price tag, or paycheck.
Creating a long-term vision for yourself is the push you need to start changing your money habits, breaking free of any negativity, and building financial routines that make that vision possible.
What do you hope to accomplish in life? Where would you like to live? What are some top travel destinations? We encourage you to ask yourself these questions to transform your paycheck-to-paycheck mindset.
Infusing intention in your money habits allows you to identify why you are cutting costs and building towards a dream future. There’s no more powerful activity than finding your why.
Putting Your Money Where Your Budget Is
It can be hard to find a healthier spending routine when the majority of Americans are in the same boat of living paycheck to paycheck. Yet, breaking free from these behaviors allows you to bring that long-term vision to life.
By creating monthly budgets, cutting costs, increasing debt payments, building savings, and finding your why, you can start living abundantly. Check out our blog to find more money methods to achieve financial success.