Are you tired of living paycheck to paycheck? Want to actually have some money to put away for a rainy day, a mortgage, or your child’s college fund?
Breaking out of this cycle can be a challenge, but it certainly isn’t impossible. Here is our guide on how to stop living paycheck to paycheck so you can finally save up for your dreams.
How to Stop Living Paycheck to Paycheck: 9 Simple Steps
We’ve put together 9 simple steps on how not to live paycheck to paycheck. Follow these tips to break the exhausting cycle.
1. Track Your Expenses
If you want to stop living paycheck to paycheck, it’s vital that you learn to track all of your expenses. Without the proper records of what you’re spending money on, it becomes very difficult to break the cycle. You might be surprised at what you can learn from tracking your money; certain things may come to light that you’ve never considered.
Ways to Track Expenses
There are a few ways you can track your expenses; one is by using an app. The advantage of this is that the records are digital. If the app has a backup feature, you’re not going to lose your records if you lose or break your phone.
You could also try handwriting your records. This might take a bit more time and you might need to do some math, but it’ll help you to slow down and really consider your expenses. When you write things down by hand, it makes you consider what you’re spending and makes it more difficult for you to justify frivolous purchases.
Another way you can keep track of how much you’re spending is by spending cash rather than paying by card. Card payments are more convenient, but it makes it more difficult to keep track of how much you’re spending.
It’s easy to put the amounts into the back of your mind when you’re using a card. But when you have to hand over the money, it’s a lot harder to ignore it.
2. Keep the Right Mindset
Just like losing weight or learning a new language, getting financially secure requires the right kind of mindset. Some days, you might feel like giving up on your plans and spending gratuitously. You need to try and find a way to talk yourself down in these moments.
A good way to do that is to understand the benefits of saving money. These things are different for everyone. It might include things like saving for your retirement, taking a trip around the world, or putting your daughter through college.
The more “concrete” these goals are, the more motivating they’ll be. If you have a definite amount you need to raise to accomplish something, it can help you to stick to your goal.
Consider writing down what your financial goals are and making a countdown for how long until you achieve it. If you ever feel like spending excessively, you can see how close you are to your goal and maybe you’ll reconsider.
It also helps to remain positive. When you’re living paycheck to paycheck, it’s easy to become demoralized with the situation. You can start to feel trapped and lose hope.
You should bear in mind that many people have been in the same situation as you and managed to get out of it. If they can do it, so can you.
3. Learn to Say No
Not knowing how to say “no” can be incredibly expensive. Things like nights out or buying a new video game can really add up. A night out can sometimes end up costing three figures.
If you want to save money, it’s vital that you know how to say no. If you’re a pushover and easily let yourself be guilted into things, it’s going to erase all the progress you have made. This doesn’t necessarily mean you need to be a hermit and never go out, but you need to know how to turn things down when necessary.
Don’t afraid to be honest and say you’re trying to get your finances in order. Good friends should be very understanding.
Be wary of borrowing money from friends, as this could become problematic in the future. The opposite is true as well. By loaning what little money you have to friends, you risk losing it in the long run.
4. Make Some Cutbacks
There are plenty of areas in life where you can afford to make cutbacks. Getting rid of your cable subscription is one of the easiest ways you can save some money.
If you do want to watch TV, you can use streaming services such as Netflix. If you want to save even more money, you can use websites like Youtube, which has an incredible amount of free content available.
Another area you can make some cutbacks in is with your cell phone. You might be able to cancel your smartphone plan and get a regular phone plan.
In some cases, it does make sense to keep your smartphone though. For example, if you don’t have a computer, a smartphone is the next best thing. Without a smartphone, you might struggle to do things like apply for jobs.
You might also consider saving money on your grocery bill by buying cheaper items. For instance, you might buy cheaper brands of bread, toothpaste, or laundry detergent.
It might not seem like you’re saving much, but if you track these expenses over time, you’ll find it all quickly adds up.
5. Know Where to Make Cutbacks
You should be careful when making cutbacks, as certain ones can cost you more money in the long run.
Let’s say you need to buy some boots for the winter. If you buy a cheaper pair of boots, it might only last for the year. On the other hand, if you buy a high-quality pair, it might cost you triple what the cheaper boots cost, but the more expensive pair might last for 10 winters.
If you buy things that are so cheap you need to keep replacing them when they wear out, you’re not saving any money in reality.
6. Consider Government Benefits
If things are so bad that you’re struggling to put food on the table, you might want to consider government benefits. If you’ve worked before, you’ve paid taxes into the system, so you have every right to claim welfare if you need it to feed your family.
If you’re considering government benefits, give your county government office a call and ask about food stamps. You’ll most likely qualify if you’re struggling to feed your family.
7. Acquire Hand-Me-Downs
You can save a lot of money by acquiring hand-me-down items from your friends and family. For example, you might consider handing down your phone to your partner when you upgrade. Getting a new phone can be expensive, so this could save you a lot of money in the short term.
When you’re open to the idea of secondhand items, you can save a significant amount of money over time.
8. Look for a New Job
When you’re living paycheck to paycheck, it can be hard to find the energy and the motivation to do a job search. But you should try to take some time to look into new jobs or perhaps getting a second job.
Spending a little time every day looking at job ads can make a difference in the long run. You don’t necessarily need to spend hours on applications.
Consider asking around your friend group to see if anyone knows of any work. A lot of jobs don’t even get advertised and the positions are simply filled by word of mouth.
9. Live Below Your Means
When you start making a little extra money, it’s easy to fall back into your own spending habits. One of the key ways you can save money is by living below your means.
Instead of spending your disposable income, you can put it away into a savings account. When you get back into a stable financial position, you should reevaluate your budget and maybe consider adding a few things back. But don’t let things get too out of hand, or you might find yourself right back in the position you started in.
Create a Better Future Now
Knowing how to stop living paycheck to paycheck opens up a whole new world of opportunities. It can be hard to make some lifestyle changes to manage your money better. But once you know how to manage your expenses and can tuck away a decent amount of money, it’ll become second nature.
If you’re looking into getting a credit card to help manage your finances, then check out our list of best credit cards for 2019.