Have you been living paycheck to paycheck? We have great tips to help you break that cycle and prosper financially.
The financial awareness provided in this guide will help you develop a simple financial plan, save money, and improve your lifestyle. Surprisingly, living paycheck to paycheck is not only for low-income earners but also for the upper class.
Earning is one thing, and managing income is another.
A paycheck-to-paycheck lifestyle plus debt means parting with some amount as soon as you get paid. This leaves you with even less to survive on and stretching to survive until the next payday.
Read on for the best hacks to get out of this financial mess.
- Detail Your Financial Standpoint
Review your current financial status. How many debts do you have? And how much do you owe?
The debt snowball payment method is one way to understand your debts and how to tackle them. You simply detail down debts or enter them in an excel sheet in descending order, i.e., the smallest debts to the biggest debt. With the visual guide provided by the sheet, you can now start paying the smallest debts.
Your net worth is also vital in understanding your financial standpoint. Yes, a net worth calculation is not only for the richest. Even the low social class has and uses money, so financial responsibility should cut across the board. Detail down all your assets and deduct the liabilities; the remainder is your net worth.
Knowing your net worth will guide your next financial decision.
- Visualize A Financially Stable Life
Don’t be so busy with your chores that you lack time to visualize how life would be happier if you worked on crucial areas of your life, like your finances.
Set some time aside and get serious about visualizing the possible transformation in your life when you’ve achieved financial goals and have some remainder to invest and save. I think it’s now the best time to think of creating a vision board for yourself.
The deliberate reminder of the possible quality of life that the vision board elicits is enough motivation to start a path to improving financially.
- Record Your Expenditure
Most people give up recording all their expenditures, yet these are the nitty-gritty of improving your financial lifestyle. This is not for the faint-hearted, and many give up as soon as they start. It isn’t enjoyable to record purchases below $1.
The recording task may be easier if you pay for everything using your debit or credit card as you retrieve the messages from the bank to list down expenditures.
The hash truth with giving up on recording your expenditure is that you’ll lose control over your money and keep wondering where you spent it. Besides, you won’t know whether you’re making any financial progress in the long run.
Luckily you can use online apps to help you track expenditures.
- Only Spend on Necessities
Living paycheck to paycheck means a wide gap between your income and expenses. You’re simply living beyond your means and need to narrow the gap.
Beware of the eminent ideology of global capitalism called consumerism, characterized by hefty discounts, buy now, pay later, and free credit cards.
We now live in a world where buying stuff feels inevitable. The ads everywhere, most of them showing things we talk about, prove that even the devices we use read our information.
These happenings make it hard to improve the paycheck-to-paycheck lifestyle unless you scale down expenses to food, housing, transportation, and utilities. Also, use any remaining money to pay the debt. Remember to use the debt snowball strategy discussed above.
Here are more tactics to control discretionary spending.
- Check The Quality of Your Inner Circle
If any of your friends take offense when you decline purchases due to budgetary constraints, they could be a hurdle in the journey to prosperity. May it be friends or family, your inner circle often contributes to bad financial decisions.
Gradually refine your inner circle to a support system that facilitates financial prosperity. Hanging out with spendthrifts makes it hard even to discuss your financial concerns in fear of shame. The culture of shame is a major obstacle to financial growth, as you will find below.
- Be Open About Your Finances
Don’t mistake this for exposing your bank or credit card details to everyone. The need to be open about finances is rooted in the culture of silence and shame in money matters.
Think about all the secrets you share, but you dare not mention your accumulating debts. Would you be comfortable sharing your financial woes? You should.
The culture of silence keeps us stuck blaming ourselves and ashamed of ourselves for plunging in financial crises. Your past failure to adhere to the budget doesn’t mean you’re a bad person. It’s a consequence of a wrong decision, and there’s room for improvement.
Sharing your financial journey or crisis would attract great ideas or help others overcome the shame.
- Save Money for Emergency
Emergencies force us to use credit cards and take up loans, sliding us back to the crisis we’re escaping. You need some cash pending in case of medical emergencies, traffic fines, unexpected travel, job loss, or other emergencies. This acts as a buffer so you won’t have to fall into debt.
The first step towards saving an emergency fund is calculating the expenses to cover basic living expenses like food, water, electricity, rent, transport, and internet. Be sure to have an exact figure.
Once you have a monthly budget, save at least six times that amount as an emergency fund. A general rule of thumb is that an ideal emergency fund should sustain you for at least six months.
Also, include the regular emergency fund contribution in your budget as it’s an essential need like food and other necessities. However, the fund should channel to a separate account that denies easy access but keeps money liquid.
- Find a Side Hustle
With expenses in check, see whether you can start a side hustle. Consider your hobbies, talents, and interests and see if you can nurture them into a lucrative business. You can also leverage your expertise and provide services for as briefly as 5 hours weekly. Another way to earn after work is by playing games and taking surveys on popular sites like InboxDollars and Swagbucks.
You could sell your skills on remote job site platforms if you’re a freelance worker. Here, you can list your profile if you’re a professional proofreader, sound editor, graphic designer, etc. Check out five ways you can boost income as a freelance copywriter.
If you have the knack for reselling items at a profit, consider registering on online sites like eBay and Craigslist. The profit you make from selling stuff online could help you comfortably make a medium-range salary or more.
Moreover, advanced technology makes it easy to find high paying jobs requiring little or no experience. Good grammar qualifies you for a transcriptionist job that requires people with an eye for detail. Alternatively, you can offer tutoring services for the English subject, Math, etc. Simply share your knowledge and earn extra income.
The best thing about online opportunities is that most of them are remote. This means that you won’t have to relocate and can work anytime. Besides, the options to make money at night are endless. You only need a reliable internet connection, a laptop, and a good headset.
- Automate Savings
Savings automation means setting up a system to save money without your input. This autopilot mode ensures that you avoid late payments, make timely payments, and your future is secure.
The first step to automatically save money is setting up a standing order instructing your bank to pay specific funds to different accounts.
An automatic saving plan ensures you pay yourself first, which is vital in personal finance. You should save at least 10% of your income, but you can surpass this amount if you like.
It’s worth noting that setting up a standing order can be expensive, so check with your bank before requesting the service to ensure that it makes sense.
- 10.Audit Your Finances Regularly
You need to remain hands-on about your finances if you want financial success. That means conducting monthly audit finances to track progress towards freedom from a paycheck-to-paycheck lifestyle.
Getting out of the paycheck-to-paycheck lifestyle is a struggle worth conquering. The lifestyle is not a permanent situation, and the hacks discussed here will get you out of the cycle. Simply watch your expenses and find ways to generate more income, and you’ll no longer survive on tea and bread, trying to stretch the few remaining dollars.
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