The reality of living from paycheck to paycheck is extremely burdensome. What happens if you run out of cash before your next check? How do you allocate which bills get paid on time and which don’t? What if an emergency comes up? All of these questions take a heavy toll on a person who may not have the financial ability to deal with them. If you have more responsibilities than just taking care of yourself, extra stress certainly comes with living paycheck to paycheck.
According to a 2014 research study by the Brookings Institute, 38 million American households live paycheck to paycheck. The CGS Team is sharing a few ways to help you stop living paycheck to paycheck and get your financial-self back on track. Some of these steps need to be done in order for them to work properly.
Get Your Finances Down on Paper
The only way you will truly get in control of your finances is to be honest with what is coming in and what is going out. Putting your income and expenses down on paper (or an excel file) will be a scary, eye-opening experience, but it’s absolutely necessary. Before you even create a budget for your money, you need to know exactly what you are working with.
Once you have a full understanding of what money is coming in and what must go out, you can start setting up a budget to allocate your income. Check out the CGS Personalized Budget Portfolios and let us take some of the burden off of you!
Once you have your finances down on paper on in a budget form, you can start cutting costs. The reason people end up in the paycheck to paycheck cycle is because they have more money going out than coming in. Cutting your spending can help you put away reserves to get you out of that cycle. Do you spend money on fast food and restaurants? Are you maxing out your credit card each month?
It is mandatory to cut costs anywhere you can. Stopping the excess spending on things that aren’t a living necessity can help drastically. If you don’t spend any more than you need to but still find yourself living paycheck to paycheck, check out the articles 4 Ways to Save an Extra $100 a Month and 4 Ways to Save on Your Monthly Bills for more ideas on where to cut back.
Pay Yourself First
Another way to break the spending more than you earn cycle is to automatically transfer money into your savings account from your paycheck. You absolutely MUST make saving money a habit. By having a certain amount direct deposited to your savings account on payday, you are starting the pay period with an amount that already includes savings. This will allow you to focus on what is left over, rather than trying to scrounge money to put into savings later.
Be smart with the amount you put into savings. If you know you can’t afford to put more than $20 from your check into savings, then only transfer $20. The point is to put money into savings without having to pull it before your next paycheck. Eventually your savings will grow and can be used for the one-off or emergency expenses that always seem to come up.
Boost Your Income
Easier said than done, especially if you are already working a 40 hour work week. However, boosting your income is one of the ways to get out of living paycheck to paycheck. If you make more money, you will have more money to put towards your expenses. Have you considered getting a second part-time job? Maybe selling old clothes? Check out the post 8 Easy Ways to Make Extra Money to get some ideas on making extra cash that don’t require a second job.
Stay Focused and Stay Positive
If it’s gotten so bad that you need payday loans or live on your credit cards, please remember to stay focused and positive. As far away as it may seem now, there is a light at the end of the tunnel. Follow the steps above and make the conscious decision to get yourself out of the debt and paycheck to paycheck cycle.
Stop using your credit cards and stop taking out payday loans. If you are making an effort, keep your positivity rolling. The fact that you are knowledgeable of your situation and believe you can get out of it is half of the battle. Start planning your financial goals, and get inspired about them!
Related: Make the Most of Every Paycheck
Have you ever been in the living paycheck to paycheck cycle? What did you do to finally get control of your finances? Your experiences may help other CGS members, so leave a comment below to share! We want every woman to feel comfortable talking about finances. Whatever your situation is, you are not alone!