There is nothing worse than living paycheck to paycheck. You can not wait for that check to come in and then it is gone days before your next one arrives. It is a pattern that thousands, if not hundreds o thousands of people fall into. Luckily, it can be prevented.
Living check to check is something that is typically caused by poor financial planning. Here are some things that can help you break the cycle and get ahead, financially.
Rule number one in managing your money effectively is that you have to have a budget, If you do not know where your money is going, you can not manage it effectively. Unfortunately, most people who live check to check have no real idea of where they are spending their money.
Budgeting is not nearly as hard as you might think. Simply write down how much you spend on all of your bills and include set budgets for things like food, fuel and entertainment. Once you have your list, you can compare it to your take home pay and then make changes to balance that budget.
If you are not saving money, be sure to add some money in the budget for saving. Ideally, you should be saving 10 percent of your money, but start out slow for now. Even 50 dollars a check can add up to a nice savings over time.
If you do not have an emergency savings, you leave yourself at the mercy of chance. You ideally should be saving 10 percent of your take home pay, but anything will help. A good, well balanced budget will help you contribute to your savings.
The best way to save, once you have the money clear in your budget, is to set things up to deposit automatically. Open an online account and then have funds transferred on your payday. If it comes out the same day, you never see it and you never miss it.
Online accounts are best because they separate your main checking from your savings. You want your emergency savings accessible, but not for instant transfer. That gives you time to rethink poor money decisions. They also pay more interest, so choose a good online savings account.
Much of what drives us into debt and living paycheck to paycheck it our desire to compete with friends and colleagues. Monkey see, monkey do.
Stop trying to “Keep up wit the Jones’ and live your life based on your budget. For all you know, the people that you see living large are swimming in debt. They will have t pay the piper at some point in their life.
Stay out of trouble and live within your means. Treat yourself from time to time but do not go into debt to do so.
The biggest burden on the average American budget is credit card debt. We have been force fed credit cards so long that it has become to seem like a normal part of life. It does not have to be. With interest rates over 20 percent, this is not debt that you can afford to carry and be financially strong.
Make a plan to cut that credit card debt. It might make things tight for a time, but you will come out stronger on the other side. There are two dominant methods in debt reduction and which one you choose depends on what motivates you.
The Debt Snowball method asks you to pay the minimum on all credit cards except the one you carry the lowest balance on. Pay the most on it until it is paid in full. This quick credit card payoff should motivate you to keep going. Once the first card is paid in full, simply move on to the next lowest balance.
The other method is the Debt Avalanche method. Here you pay the minimum on all cards except the one with the highest interest. Pay the most on that card until it is paid off and then move on to the next highest interest. This method maximize your money by reducing total interest paid. If you are a more logical person, this method should appeal to you.
Make More Money
If you are not making enough money, perhaps you should simply make more.
That sounds overly simple, but how much free time do you have? Chances are that you ahve enough time to pick up one shift a week at a retail store. Simply working one shift at a local Walmart can make you an additional 400 dollar a month.
If you are living paycheck to paycheck, 400 dollars a month can likely cure your problem.
Not an hourly person, consider doing a little hustling. Drive for Uber, cut some lawns in your spare time or even walk some dogs. There are lots of ways to make a little extra cahs if you are creative and ambitious.