Living paycheck to paycheck is more common than you may think. According to CareerBuilder, 78 percent of people are living paycheck to paycheck in the United States. Not only is this stressful and puts you in a survival mindset, but you may also believe that there’s no end in sight.
However, it’s more than possible to achieve financial freedom. Read on for our top five financial tips on how to stop living paycheck to paycheck!
1. Create a Budget
It’s first important to know where all your money is going each month. Although this may seem daunting, in the end you’ll feel far more in control of your money. The best part is you’ll be able to identify areas of your life where you can cut spending or reduce costs.
Take into account your rent, utilities, insurance, car payments, online subscriptions, and debt. If you have expenses that fluctuate each month like groceries, make your best guess for the average cost with plenty of wiggle room.
2. Calculate Income
Now that you know what you spend each month, find some of your most recent paychecks and determine whether you’re making enough each month. You may find that due to your income and expenses, you’re just barely scraping by.
This is your opportunity to look at your budget and see if there are any areas where you can save money. If you find that you’re still struggling to make ends meet after this, you’ll need to consider whether it’s possible to find a higher paying job or to work a second job or side hustle.
3. Cutting Expenses
There are a few simple ways that you may be able to save money each month. Negotiating lowering your rent is an option that many people never consider. You can also see if there are more affordable places to shop for your groceries. If you have online subscriptions that you use rarely, cancel those.
Don’t hesitate to contact your phone company and see if there’s a less expensive plan available. Remember that even just an extra $20 a month can give you greater peace of mind.
4. Pay Off Debt
Once you find that you’re able to save up more, try to focus on paying off your debt as soon as possible. The sooner you get rid of your debt, the sooner you can begin repairing your credit. You can use either the snowball method or the avalanche method.
If you need more motivation to pay off debt, we recommend using the snowball method because you’ll be able to see results sooner. The avalanche method, on the other hand, will save you the most money over time.
5. Side Hustles
It can be hard to find a way to increase your income if you’re already working over 40 hours a week–especially if you have young children. Avoid MLMs as much as you can–these will only put you into more debt despite their get rich quick claims. Instead, focus on methods such as:
- Selling clothing and furniture you don’t need
- Providing online services on sites like Upwork or Fiverr
- Drive for Uber or Lyft
- Micro jobs with Mechanical Turk
- Become a house or pet sitter
Keep track of all your income and expenses for tax purposes and motivation!
How to Stop Living Paycheck to Paycheck: It’s Possible
If you’ve wondered how to stop living paycheck to paycheck, it’s more than possible. Document all your expenses and income and focus on cutting costs, expanding your income, and paying down debt.
Remember that nothing will change overnight, but with a long-term view in mind, you’ll be able to turn your life around.
Want more ways to make more money and cut costs? Keep reading our blog for more tips!