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It is not fun to live paycheck to paycheck lifestyle. No one wants to live this way.
Many people say it is a choice that we choose to live paycheck to paycheck.
This is not true. I have never met anyone telling me that they enjoy living paycheck to paycheck lifestyle.
People only asking me how they can break the paycheck to paycheck cycle and achieve stability and financial freedom?
In this article, I am going to share with you a few strategies that I have used to successfully stop living paycheck to paycheck.
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What Is Living Paycheck To Paycheck?
Many believe people living paycheck to paycheck are the poor. This thinking is wrong.
There are rich people also struggling with this problem. To say that only poor people living paycheck to paycheck lifestyle is not accurate.
what is living paycheck to paycheck means?
It simply means any individuals who must use every paycheck to cover expenses with nothing left for saving. They are consistently running out of money before the next paycheck arrives.
The person has no significant saving or liquid assets.
The person can end up living on the street if get fired.
Anyone fits the description above is living paycheck to paycheck. Rich or poor is not a factor.
Individuals who live paycheck to paycheck are constantly under financial stress. It makes them feel trapped and worthless from not having the financial means to meet their and their family’s needs.
The statistic has shoved nearly 70% of American live paycheck to paycheck.
Tired Of Living Paycheck To Paycheck
Let forget above the definition of living paycheck to paycheck.
If you are reading this article, there might be a chance you are struggling to meet everyday financial obligations.
Are you looking for ways to improve your financial situation?
You are tired of having to constantly worry about money.
Looks, you are not alone.
People always tell me that they are sick and tired of living paycheck to paycheck.
But being sick and tired of a problem is not enough to solve it.
If you want to break from living paycheck to paycheck cycle, you need to take some concrete actions.
I am going to share with you a few small steps that you can implement today to stop living paycheck to paycheck.
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How to Stop Living Paycheck to Paycheck?
I once was told that ‘I am the creator of my own living paycheck to paycheck problem.’ Sorry, this was not true.
Sometimes, this problem arises from an unexpected event. Mine was medical bills. You might be something else.
Before you can stop living paycheck to paycheck, you first have to recognize the problem and commit to deal with it.
Yes, it’s difficult when you are faced with bills and have no money left over from the paycheck.
But if you are committed to solving this problem, then you can use these strategies to help break from paycheck to paycheck life cycle.
Creating A Paycheck to Paycheck Budget
You must have heard enough from people telling you that you must create a budget to escape from the paycheck to paycheck problem.
Their idea of a good budget is when your earnings covered your expenses, a balanced budget. This is the same as living paycheck to paycheck.
There is no money left over in the balanced budget.
You don’t just need a balanced budget. You need a paycheck to paycheck budget.
The first financial issue you have to tackle on the paycheck to paycheck budget is tracking the expenses.
Dealing with expenses
The cause of your living paycheck to paycheck starts with expenses.
Tracking expenses will help you identify what I consider necessary expenses and discretionary expenses.
- Necessary expenses are things that support your life, such as groceries.
- Discretionary expenses are things that you can live without, like eating out.
The best way to do this is when you receive the next paycheck, creates an expense list to track where all the money went.
Now take this expenses list and go through each transaction to make notes which are necessary expenses, and which are discretionary expenses.
Be careful to label the expenses based on the transaction, not payment.
Example: Paying credit card debts for a charge for movie tickets is a discretionary expense, not a necessary expense because the transaction is for movie tickets.
Once you have carefully separated all expenses into these two categories, you need to total up all necessary expenses.
Now determine your potential saving, take the total necessary expenses and subtract from your paycheck. The difference is the amount that could potentially save from each paycheck if all discretionary expenses are eliminated.
Well, we all know that we cannot eliminate everything. But, we can work to reduce these expenses.
Reduce Discretionary Expenses
Look at your discretionary expenses to see what you can reduce or completely cut out.
Anything that you can cut from discretionary expenses, these are money you can save.
- Make coffee at home, not buying from Starbuck
- Reduce the cable services
- Cook at home, instead of eating out
- Rent movies, avoid the theater
- Reduce rent if you can.
When I did my paycheck to paycheck budget, I found monthly rent was my largest waste. I decided to move to a smaller house and saved about $300 per month.
One fun option to reduce expenses that you must take advantage of is saving programs.
Reduce Expenses Using Discount and Saving Programs
Joining saving programs allow you to reduce expenses, but still enjoy what you love.
Discounts, coupons, and cashback are programs you can use to help reduce expenses.
With the internet, there no need to spend hours searching for savings or discounts from newspapers.
You can join these online programs and start saving.
Ebates: This an online cashback program that pays you to shop. This program even gives you $10 for signing up as a new member. Ebates allows you to earn cashback both online and offline shopping. This is a good way to reduce spending while you shop. You can read this Ebates Review article for more detail.
Swagbucks: This site offers a few saving programs, cashback, coupons, and surveys. You can earn $3 just for joining the program. The three saving options allow you to save more. Read this Swagbucks Review to learn more.
InboxDollars: This is another popular online saving program. You also have three options to save like Swagbucks. However, this program pays you cash, and you can make $5 for just signing up for a new account. Here’s more information on InboxDollars.
I am a member of all three programs above. You get $18 just to join. Every month, I save over $100 with these three programs.
Just to give you a quick idea, I save over $400 a month by reducing discretionary expenses and joining saving programs.
With the expenses under control, I turn my attention to improving my income.
Ways to Increase Your Paycheck to Paycheck Earnings.
You can reduce expenses to a certain extent. If you want to increase savings, you must find ways to improve your earnings.
Improving income doesn’t necessarily have to be finding another job.
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Drive for Uber and Lyft
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No one likes to be living paycheck to paycheck life.
You can break free from this financial stress by adopting the strategies above to make changes.
- There is no need to take drastic actions. Follow me and take one small step at a time.
- You only have to do two things to stop living from paycheck to paycheck, control spending and improve earnings.
Share with me your experience below.