6 Ways to End the Living Paycheck-to-Paycheck Lifestyle
According to one survey, 61 percent of employees report that they usually or always live paycheck to paycheck to survive. The number of people stuck in this cycle does not seem to be affected by the economy, as high numbers were reported before the recession as well. If you are living the risky lifestyle of surviving paycheck to paycheck, the good news is there are things you can do to rectify your situation. Additionally, there are some things that you should avoid at all costs so that you do not dig yourself into a deeper hole financially. Here are six things you can do to stop living paycheck to paycheck.
1. Cut Down Your Spending
If you follow a budget, but still find that you have no savings left over at the end of every month, then the first thing you must do is decrease your expenses. One good rule of thumb to follow is that if you are unable to pay cash for something, then it is probably not something you necessarily need. There are plenty of ways to cut down on your spending such as packing your lunch instead of eating out or turning off your thermostat more often.
2. Understand The Benefits
If you do not want to live paycheck to paycheck any longer, than you must accept making significant changes to your lifestyle. Instead of going about it with the reluctant attitude, take the time to think about where you’ll be once you break the paycheck-to-paycheck cycle. Once you take control of your finances, you will be able to invest, pay off your debts, save for major purchases, and create an emergency fund. By knowing the benefits of breaking the cycle, you can stay motivated to get where you need to be financially.
3. Increase Your Cash Flow
To stop the paycheck-to-paycheck cycle, you must spend less money than you are earning. However, if you’ve already cut your expenses as much as possible than you may want to consider making more money. After all, there are only so many expenses you can cut out, but your ability to increase your cash flow has no limit. One good way to do this is to ask your boss to give you a raise. If that is not an option, then perhaps a part-time job on top of your current employment will do the trick.
4. Scrutinize Every Dollar You Spend
It does not matter if it is a coffee or a pack of gum, if you are paying money for it, you should think carefully about whether or not the purchase was entirely necessary. To get yourself out of the paycheck-to-paycheck cycle, you must avoid spending unnecessary money at all costs. One good way to figure out if there is any fat you can trim is to keep all your receipts for a week and take a few minutes to look over every purchase you made. You’ll likely find in hindsight that there are purchases you did not need to make, which can help to fine tune your spending in the future.
5. Find Interesting Ways to Make Extra Money
On top of working more, you also have the option of seeking unique ways to earn some extra side money. For instance, you can sell some of your things online or hold a yard sale. Moreover, you can try your hand at starting a small business or providing a service like being a nanny or yard work. The list of stuff you can do to make extra income is virtually endless; you just have to be willing to get creative.
6. Avoid Nickel and Diming
For instance, using a bank other than your own banks ATM will charge you between $2 and $5. Additionally, your own bank may charge you for using a different ATM. Such unnecessary fees should be avoided at all costs because they can add up to a substantial amount after a while. Also, avoid late payment fees on bills and credit cards and avoid paying extra airline costs that are not essential.