Nearly 80 percent of American workers (78%) say they're living paycheck to paycheck, according to a 2017 report by employment website CareerBuilder. 81% of women report living paycheck to paycheck, compared with 75% of men. Alright ladies, if that statistic doesn’t scare you, I don’t know what will! I’m on a mission to help as many women as possible break free of the paycheck to paycheck lifestyle.
In order to break the vicious cycle, you must understand what is causing you to live paycheck to paycheck, then actively work to fix it. Just like any other problem you would deal with. I’m sharing 6 ways to push your paycheck further, but before I do, let’s talk about what actually causes a person to live paycheck to paycheck.
What Causes the Paycheck to Paycheck Lifestyle?
Lack of budgeting
Budgeting brings knowledge about your situation. When you set up a budget, you have a good understanding (or you should, at least), of what money is coming in, what money is going out, and what is left over. When you know that information, you can plan accordingly.
You can set up your budget to ensure all of your bills and expenses are covered, while leaving the rest to help you reach whatever goal you have. If you have a budget in place, but still feel like you live paycheck to paycheck, then this issue may be your spending.
Lack of spending control
A lack of control around your spending can easily lead you down the path of waiting to get paid again. You’re spending money you shouldn’t, which causes you to not have what you need. This can quickly create a cycle of never having enough. If the numbers are telling you that you should have money left over, then the issue is your spending.
Lack of income to cover necessities
Finally, sometimes it isn’t your budget or your spending that’s the problem. The problem is you don’t make enough to cover your basic necessities. This will always keep you in the paycheck to paycheck cycle, or further behind.
When you create your budget, you are able to see if your income is enough to cover everything. If it’s not, then you’ll need to find additional money to cover the difference. You’ll never be free of the paycheck to paycheck lifestyle if you never have enough money coming in.
6 Ways to Push Your Paycheck Further
#1 – Try to even out your expenses for each pay period
Wouldn’t it be nice to have the same amount of money left over after each paycheck? As opposed to needing one paycheck in full and only part of the other one? If you can even out what you spend by pay period, you can reduce the need to wait for payday to get your bills covered.
It may take a pay period or two of not spending money to help you get ahead, but it will be worth it when you can get to a place of splitting your expenses evenly each pay period. Check out How to Get One Month Ahead on Bills for some more insight.
#2 – Limit what you spend on the non-essentials
Your paychecks can take you a lot further if you aren’t constantly spending money on things you don’t need. If you want your paychecks to last you longer, you’re going to have to cut out the non-necessary items. This won’t be a permanent situation. Keep your spending light until you are at a place where you are only spending money after everything else is taken care of.
#3 – Make sure you’re not putting too much into savings
If you’re putting too much money into savings, your paychecks won’t be able to take you as far as they could. To determine what a good number to save each month is, you’ll want to look at your budget. What income is left over after all of your bills and expenses are covered?
From that left-over amount, what needs to go to discretionary spending? Once you have that amount, you know what you can reasonably afford to put into savings. Saving too much money doesn’t seem like a bad thing, but it is a mistake that can keep you in the paycheck to paycheck lifestyle for a long time.
#4 – Factor in some wiggle room
There’s nothing like having an unexpected expense come up and completely throw your budget out the window…especially if you are already tight in between pay periods. Unexpected expenses can hurt your efforts of pushing your paycheck further. This is why having an emergency fund is so important.
Another solution is to factor in some wiggle room into your budget. I do this with my clients. Allocating a small amount of money each month to “Miscellaneous” expenses can help you cover unexpected costs and keep your budget working properly. I guarantee you that this wiggle room will come in handy!
#5 – Set up automatic bill payments and pull cash for the rest
You can’t spend money you don’t have…or you shouldn’t be spending money you don’t have! Assuming that you already know not to do that, why not get the money out of the account as soon as possible? Setting up automatic bill payments around your pay days can help make sure your bills are covered and leave little to no room to spend your bill money.
From there, pull cash out for any other spending that needs to take place before your next payday. You’re building the habit of only spending what you have. This will help your paychecks work harder for you, and keep you in check with your budget.
#6 – Have a plan in place for smaller or larger than expected paychecks
It’s great to have your income budgeted down to the penny, but what happens if your paycheck is smaller or larger than planned? Instead of letting something like that ruin your budget, have a plan in place for how to handle those situations before they happen.
For larger than expected paychecks, can you save the money? Maybe put it towards debt? For smaller than expected paychecks, can you cut back the discretionary spending? Think about these situations before they happen, so you are well prepared.
If you’re struggling to allocate your income properly, schedule a free consultation with me now and let’s work through it together!
Make Changes Where Necessary
Ready to push your paycheck further? Here are a few ways to make necessary changes to help you improve your financial situation.
Understand your minimum needs
In order to fully understand your situation, you need to know exactly what it looks like. Make a list of your minimum necessities and how much they all cost. If your needs aren’t covered with your current income, take on extra income to cover the minimum. Your basic necessities should always be covered with your income. If not, you need to make more money.
Trim the fat
Another way to help improve your situation is by reducing your spending on things that are not necessities. Cut out the non-essentials until you can get to break even and/or profit with your income and expenses. Failing to get to break even could result in you falling further and further behind. This just prolongs your success and solution to the problem.
Related: Make the Most of Every Paycheck
There are certainly ways to push your paycheck further and make it work smarter for you. The suggestions above will get you started. Do you live paycheck to paycheck? What are you doing to improve that situation? Share your thoughts by leaving a comment below!
The CGS Team