My mission in writing this post is to empower us all to stop living from paycheck to paycheck
Sadly, many Americans are living paycheck to paycheck.
How do we know?
A Bankrate financial security index survey found that 61 percent of Americans do not have enough savings to pay off an unexpected $1,000 bill – they’ll need to go into credit card debt or borrow from others.
The survey also found that the average unforeseen bill is more likely to be $2,500. I myself know the feeling of not being prepared moneywise. This is not a good situation for anyone to be in.
Don’t make the mistakes I made.
In my early 20s I worked 8 am to 10 pm, on my full-time and part-time jobs. BUT I was still living paycheck to paycheck!
Instead of paying myself first, I spent all the money I made on stuff that wasn’t useful, like fashionable clothing. I did not have any savings or saving goals 🙁
Because you’re reading this article, I know you’re different.
You want improved finances. Or you want to stop living from paycheck to paycheck. You want to boost your savings by cutting spending and increasing your income.
You can set your money goals and accumulate more money for a better future 🙂
What do you need to do then?
I’ve put in time and effort to prioritize the most important steps you can take to increase your financial security. Here are my top tips to stop living paycheck to paycheck and strengthen your finances.
#1. Do Regular Budget Health Checks
Just like you need regular health checks, your budget also needs regular health checks.
Don’t know where your money is going? Many don’t, and therefore they continue to live paycheck to paycheck.
Do yourself a big favor.
Make a note in your diary or calendar to do a budget health check every week or at least every two weeks.
This way you find out what’s going on with your money. Gather up all your bills, including credit card bills, and go online to check your bank accounts.
-What am I spending my money on?
-How much exactly are these expenses?
-Are there any patterns in my spending?
-Where can I reduce my spending?
It literally pays to be really aware of what’s happening to your money. Only with this knowledge can you decide on the areas of spending to stop or reduce, so that you’ll have more and more money in your bank account.
#2. Save More Money
A great way to save more is to pay yourself first. The easiest way is to set a regular saving amount and automate a regular transfer of this sum into a dedicated savings account.
This way you guarantee that every time your paycheck comes in, a certain amount of it will go into this special savings account. The amount in there will compound and build up – it can become your emergency fund or retirement fund, depending on your needs.
Let’s do some math.
Say you’ve automated a bi-weekly $60 transfer to your special savings account. So, in a year, your savings will add up to $1,560 (before adding interest).
This will mean that you’ll be among the 39 percent of Americans who CAN afford to use their savings to pay off a surprise $1,000 bill 🙂
Keeping to the same saving rate, and in two years you’ll have $3,120! Congrats!
The number 1 best way to save more, no matter what your income, is to be honest with yourself. Tell apart what you need and what you want.
You don’t have to want stuff that costs excessive spending and threatens your financial health. Be aware of unneeded spending like upgrading your phone, PC, TV etc..
Avoid the marketing traps that sellers spring, and you’ll make real savings by using what you have at present.
Question your own spending.
Do you need to buy lottery tickets? No.
Do you need cable TV? No.
Do you need the latest phone? No.
You get the idea.
Appreciate what you have and quit comparing what you have with what others have. NEVER try and keep up with the Joneses, which is meaningless.
Care more about your own financial health and security – this is really meaningful 🙂
#3. Stop Impulse Spending By NOT Going Window Shopping
Remove the temptation – don’t go to malls unless necessary.
Don’t browse online shopping sites unless you’re looking for something you need to buy.
Advertising is scary – adverts make you think of buying stuff, when just a moment ago, you were unaware of the product and happy without it!
#4. Stick to a Delay Policy
When you’re thinking of buying something that’s not an essential item, sleep on it. Give yourself 24 hours, 48 hours or longer to decide if you really really wanna buy it.
Applying a delay policy helps you to avoid impulse buying.
Give yourself the time that’s needed to write down both the pros and cons of buying something.
How much is it? Will the purchase improve your life? How exactly?
What would you need to give up if you spend the money on your purchase?
So, stick to a delay period to make the right buying decision.
#5. Ask for money tips from the frugal folks you respect
If you know some folks who are careful and good with money, think about approaching them for money tips (assuming they’re approachable 🙂 ).
Persons who live in your area may know about places where great deals can be regularly had for groceries and other things.
Tapping this knowledge will mean you to save huge on constant expenses like food and other necessities. Day after day!
#6. Think about what you’ll need to give up if you spend the money on a purchase
Perhaps you’ll delay the growth of your emergency fund. Or you’ll be putting less into your children’s education fund.
Stores know this – they try and use time pressure on you to make you buy stuff, like having sales with limited time offers.
Remind yourself that there are always sales and there will always be “special” offers in the future.
Chill and give yourself the needed time to think over what you’re wanting to buy.
Remember this: oftentimes we feel great after buying something due to its novelty value. But this excitement and “happiness” soon fade within a short time.
Haven’t you experienced this before?
#7. Never spend more money than you earn
Aim to spend less and less than what you earn, within reason of course! Your budget health check will give you ideas about the areas of spending that can be cut back.
Read these to find out many different ways to save lots of money and build your wealth.
#8. Pay Off High Interest Debt
Once you’ve saved up your emergency fund of, say $2,000, use your extra savings to pay off your debts, starting with the highest interest debt like credit card debt (The interest rates can range from 13.12 percent to 22.99 percent, according to ValuePenguin).
#9. Make More Money
Finding creative but realistic ways to make more money will improve your finances.
One easy way is to get rid of your clutter and make some money from selling your used items. Discover where you can sell your stuff here.
Read this post on side hustles to find out about the many side hustles that will make you more money.
You’ve made a great start by reading this article. Decide to take the recommended action steps:
-Do a Budget Health Check
-Save More Money:
-Pay yourself first by automating your savings
-Pay off high interest debt
-Question your own spending on things like lottery tickets or the latest phone
-Stop impulse spending
-Wait 24 hours or longer before deciding on buying non-essential items that you like
-Think about what you’ll need to give up if you spend the money on the purchase.
-Never spend more money than you earn.
Motivate yourself and keep going. Take these actions:
-Find a saving buddy to encourage each other and keep you both accountable
-Share your money goals with folks who believe in you
-Display and look frequently at a record of your money achievements e.g. Saved $300 by not
“upgrading” to a new phone that I don’t need.
-Display pictures and inspiring messages on your long term money and life goals e.g.
a more secure retirement. Put up these pictures and messages on your phone or PC
desktop and above your kitchen sink
Take your initial steps and keep moving forward.
Over time, your efforts will snowball and new habits will form that will take you on the sure path to money success and contentment.
I wish you all financial success. No more living paycheck to paycheck forever 🙂