Living paycheck to paycheck is extremely frustrating. There’s no worse feeling than being strapped for cash and waiting for your next pay day to come around. In the U.S., around 78% of full time workers admit to living paycheck to paycheck. When combined with debt, a good chunk of society is left in a severe financial bind.
While it seems impossible to break the cycle, there are ways to get on more solid financial ground. Here are 5 personal finance hacks to follow if you want to make your paychecks go farther for longer.
1. Create a Budget
One of the best things you’ll need to do if you want to stop living paycheck to paycheck is to create a budget. It only takes a few minutes to develop a budget. With the numbers on paper, you can see how much money you’re bringing in as well as where your cash is going.
Once you’ve created a budget, the next step is to actually budget. This involves tracking your spending, cutting expenses where you can, and not spending once you’ve hit a certain threshold.
The budget you create needs to use actual expenses in order to be effective. Aside from routine bills, you also need to account for car registration fees, property taxes, and other yearly costs that you know you’ll incur.
2. Cut Expenses
After you’ve created a thorough budget, the next step is to sit down and figure out where you can cut expenses. Start by looking at how much you pay for common services like cable and internet. As a quick way to save money, bundle these two services with the same provider for a lower cost.
If you’re already bundling your services, consider your actual usage of them. Do you really watch the hundreds of television channels available to you? Does your internet need to be super fast? Are there cheaper alternatives?
To effectively cut expenses, shop around for home services. These days consumers have cut cable and have embraced the use of entertainment services like Netflix, Hulu, and Amazon Video. These services are much cheaper and even offer a greater variety than standard cable.
You’ll also want to look at cutting expenses when it comes to certain items, like groceries and medications. To save money, try buying items in bulk and always shop with a grocery list. If you take medications, find ways to reduce these costs. For example, a good way to slash Xarelto price is to ask your doctor for coupons, sample packs, or even a generic form of the medication.
3. Cut Spending
Once you’ve found ways to reduce the money you must put towards monthly expenses, you’ll want to move onto cutting spending. If you’re like most people, chances are you spend a lot of money on entertainment, shopping, and other items that are wants versus needs. To end the paycheck to paycheck cycle, you’ll need to cut back on spending and in turn put those dollars towards paying off debt.
Reducing spending doesn’t mean your life has to be boring, it means staying entertained frugally. Cook more meals at home versus going out to eat. Order a movie at home and have your own theater party versus going to the movies. Invite friends over for a get together instead of going out.
By reducing how much you spend on extraneous items each month, you’ll find that you have more money available.
4. Focus on Building
Knowing where to cut spending is one part of the equation, but building is the other half. By focusing on building an emergency fund and increasing the amount if income you make, you can get yourself on better financial ground.
Though it may seem impossible to be able to build an emergency fund if you’re living paycheck to paycheck, it’s not! Even putting just $50 away each month will start to add up. Having an emergency fund is crucial in the event that an unexpected expense, like your car dying, needs to be paid for. This way you can pay for the cost out of pocket versus putting it on a credit card.
The next step is to bring in more money. You can work a part time job or create a side hustle. These days you can make money online by:
- Selling unused items (clothing, electronics, etc.)
- Creating website content
- Offering your services (landscaping, cleaning, etc.)
- Taking paid surveys
- Working as an Uber or Lyft driver
By building, you can increase the amount of cash flow you have available, allowing you to create the cushion you need to feel more financially secure.
5. Stick With It
Budgeting, cutting, and building don’t happen overnight. Your bank account won’t grow in just a few days. The key is to stick with your budget and keep your spending habits under control. If you stick to your strategy for just a few months, you’ll be surprised at not only how much money you’ve saved, but how much more money you have available.
Conclusion
Breaking the paycheck to paycheck cycle can feel impossible, but it’s not. Follow these steps to improve your financial security and to make your money go farther.
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