Are you living paycheck to paycheck cycle? Are you trying to break this cycle but cannot? If so, read this article to find out simple strategies to break the paycheck to paycheck cycle. It will help you save your hard-earned dollars and have a better financial future.
Find out the reason for your present lifestyle
First of all, find out the reason behind your paycheck to paycheck lifestyle. Is it because you can’t save or that you’re drowned in debt and struggling to come out of it? It can also be that you can’t resist the temptation of fulfilling your wants.
Whatever be the reason, finding it out can help you stop living a paycheck to paycheck life. So, consider it as your first step.
Plan a realistic budget
What is the formula for planning a realistic budget that you can follow with ease? Pretend that you earn less. Keep aside, say about, 20% of your monthly take-home pay and plan your budget with the remaining amount. Is it enough to satisfy your needs? If so, go ahead and plan the budget with the remaining 80%. Doing so, you can effortlessly save a certain amount every month and break the paycheck to paycheck cycle.
You can follow various strategies to plan a realistic budget. The envelope strategy helps where you put money into envelopes named as per spending categories. Take out money from the designated envelope only. It will restrict your unnecessary expenses to some extent.
You cannot plan a realistic budget all of a sudden. It will take some time to plan one that you can follow with ease. But trial and error will make you perfect. So, don’t be afraid to plan a budget.
Automate your savings
It is better you save first and then spend instead of doing vice-versa. So, set up automatic transfers from your checking account right on your payday. It can be saving a certain amount for your retirement, for any emergency fund, or to another savings account. The point is to save a certain amount every month and to break the paycheck to paycheck cycle.
Likewise, you can also set up automatic credit cards and other bill payments. Doing so, you’ll never be late on your payments and can avoid paying the late fees. Moreover, you’ll be forced to repay the outstanding balance at every billing cycle.
Make lifestyle changes to cut down expenses
Yes, little changes in your lifestyle can help you save a significant amount every month. You can move to a smaller house or an apartment. Or, you can rent a part of your house, like unused garage space, the guest room, etc. While doing it make sure you don’t have to compromise with your privacy.
If you have one extra car, sell it off. Commute with friends or spouse to your workplace. Do not make frequent visits to the grocery shops. Instead, make a list and buy the required things by visiting the grocery shop once a week. Doing so, you’ll save fuel. It is good practice for the environment too.
If you have a gym membership but rarely visit, consider canceling it. Instead, work out in your nearby park.
Also, pack your lunch to work and avoid having Starbucks coffee every morning. Instead, carry your coffee while driving to work. Restrict eating outs to once a month for the time being. Plan potluck parties with friends and enjoy a good time.
Carry a list when you go shopping
It becomes difficult to distinguish between needs and wants when you don’t have a list. I would suggest you make a list even when you go shopping for garments.
Buying clothes is a need but buying branded clothes is a want.
Having a list can help you to first buy the things you need instead of satisfying your wants. Then, if you have remaining dollars, you can satisfy your wants a bit. But, don’t swipe credit cards for the purpose. It will help you avoid unnecessary spending.
Carrying a list for grocery shopping is a must. Unless, you get enticed to buy things if they’re on discount. Undoubtedly, it’s a good deal to purchase things on discount. But often you end up buying stuff that you don’t need.
Create an emergency fund
You can start an emergency fund even by depositing a little amount every month. First, you get into a habit of saving, then you can increase the amount you deposit.
Try to have about 5-6 months of your living expenses in your emergency fund. And, do not use the fund for other purposes unless it’s a real emergency. When you use the fund for an emergency like medical expenses, a sudden car repair, etc., try to replenish the fund as soon as possible.
An emergency fund can help you avoid debt in the future.
Get rid of debts, if any
Being in debt itself can be a reason for the paycheck to paycheck living. So, promise yourself to solve your debt problems. It may take a little longer depending on the amount of debt you have, but promise to stay motivated until you repay the last cent.
Do not delay; act immediately. Select a suitable debt relief strategy and start paying back your debts. Avoid incurring additional debt until you repay the existing ones.
Lastly, I would like to mention to increase your earnings. It is one of the best ways to stop living paycheck to paycheck. An additional income always helps.
You can do a part-time job of your choice. You just have to find it out. If you love pets, you can be a pet sitter during the weekends for a few hours. Try to choose a thing that you love doing. It will help you remain stress-free and you’ll enjoy it too.
Mia Jones has been freelance writing for the last few years and she mostly writes on various fields of personal finance, Frugality, Minimalism, etc. She is also currently a regular contributor to creditcardconsolidationdebt.com . While she is not writing, she spends most of her time exploring new places, people, and their culture. Get in touch with her on twitter at @MiaJone96792889
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Disclaimer: This website (the “The Money Pal”) is published and provided for informational and entertainment purposes only. The information in the Blog constitutes the Content Creator’s own opinions and it should not be regarded as financial advice.