When you’re living paycheck-to-paycheck, few things are as stressful as the last day or two before your next payday: Your bank account is running on empty – and so is your gas tank. You’ve got a stack of bills waiting to be paid, and your refrigerator is looking pretty bare.
And when payday finally comes, you find that by the time you fill the car, pay the bills, and do your grocery shopping, you’re back to square one: Flat broke (or pretty close) and counting the days until you can do it all over again. And in the meantime, you keep your fingers crossed that no unexpected emergencies – like a costly car repair or an emergency root canal – come up along the way.
You don’t need me to tell you that this is no way to live, long-term. But it’s not always easy to put a stop to the paycheck-to-paycheck cycle. Trying to transition away from the stress of living from check to check? Here are some steps you can take to break that cycle and get your finances on solid ground:
- Track your spending. If you’re living paycheck-to-paycheck, it’s possible that you might be overspending. But you can’t dial down your spending until you know exactly where that money is going every pay period. An easy way to do this is to track your spending from one paycheck to the next. Save receipts from debit card transactions and write down any purchases you make with cash. Include any bills or living expenses you paid for that time, as well. By the time your next paycheck rolls around, you should have a pretty good picture of where your money is going. Are you blowing big bucks on restaurant meals? Wasting a few dollars here and a few dollars there on impulse purchases?
- Create a budget. The key to ending the paycheck-to-paycheck lifestyle is figuring out how to make your money last. Ideally, you want to make it to the next pay period without being flat-broke (and with a few bucks stashed away in savings, too!). Once you’ve reviewed your spending, it’s time to sit down and create a budget. Include categories like rent or mortgage, utilities, and other monthly expenses, as well as things like groceries, savings, and entertainment.
For some ideas on creating budget, check out this post or this one.
- Make saving money automatic. One key to financial stability is having some money set aside in a savings account. If you’ve got some cash in savings, you’re better equipped to handle unexpected expenses that would otherwise derail your budget. If you don’t already have a savings account, open one. Then, decide how much money you can comfortably save every month (if you’ve already created a budget, you should have an idea of this amount). Finally, set up an automatic transfer from checking to savings, scheduled for every payday. You might be surprised at how quickly your account grows.
- If you get a raise, ignore it. This is a great trick for ensuring a little wiggle room in your bank account. The next time you get a raise, just pretend it didn’t happen. Don’t alter your budget or change your spending habits. Just put the extra cash in savings and move on.
- Pay bills on time. Late fees are the last thing you need when your budget is already stretched thin. If you have problems making payments because, say, all of your bills are due during one pay period, try requesting a different due date. Many service providers and lenders are willing to adjust if it means they’re more likely to get paid.
- Stop using credit cards. When you’re living paycheck-to-paycheck, it’s tempting to treat your credit cards as an emergency fund or another source of income — but don’t give in to that temptation! You’re just setting yourself up for more high-interest debt, and more credit card bills to pay each month. If you need help resisting the urge to charge, stop carrying them. Simply take all of your credit cards out of your wallet and put them in a secure place. That will help you avoid making impulse purchases.
- Start living below your means. There’s a reason that some people seem to have more money than others: They don’t spend it. Well, that’s not quite true. They do spend money – but they spend carefully, and they don’t spend as much as they could. They aren’t the people with the fanciest cars or the biggest houses, but they are often the people with the biggest savings accounts, and they rarely have debt problems.
Living paycheck-to-paycheck isn’t easy – but if you’re willing to make some changes, it is possible to break the cycle. If you need debt or budgeting advice or help with your out-of-control credit card payments, you can always contact the Debt Guru team today for a free, no-obligation quote. Our friendly, certified debt counselors will be happy to help you take steps toward a financially sound future.