Living paycheck to paycheck means, in simple terms, that you are always running out of money before your next paycheck arrives. As any financial advisor would tell you, living paycheck to paycheck is incredibly stressful and can impact your financial well-being.
When you are living paycheck to paycheck, it is nearly impossible to get ahead financially. You don’t have any extra money to save or to create an emergency fund. Sometimes you end up borrowing money to make ends meet and get into more debt.
For most of us, it is just not feasible. We are just not making enough money. If this is the case, something needs to be changed.
This article will discuss how to stop living paycheck to paycheck. It will first discuss the various signs that suggest that you might be living paycheck to paycheck. It will also discuss the reasons why you would want to stop living paycheck to paycheck. If you’re serious about ending the cycle of living paycheck to paycheck, it makes financial sense to work with a financial advisor to come up with a financial plan.
One main reason why you would want to stop living from paycheck to paycheck is that you want to attain financial independence.
Find out now: 6 Reasons You Will Never Reach Financial Independence.
To be financially independent requires that you have a lot of money. We all have heard the saying that money can’t buy happiness or that money can’t buy love. Don’t get me wrong—there is some truth to this. For example, a millionaire, just as a poor person, can be very unhappy in life.
He or she can be sad, depressed, suicidal despite having a lot of money. But one thing we know for sure about being rich is that money can buy hard goods.
Money gives us options and protection. It can buy you better physical and emotional health. Money can buy a beautiful beach house in Hawaii. Money can give you peace of mind knowing that your kids’ college education is covered; and knowing that you and your family are protected after retirement. Having a lot of money can give you the freedom to put your mind to more positive things.
Here’s what being rich can give you: a home, owning rental properties, a vacation home, early retirement, private school for your children, financial independence, large bank account, freedom to travel the world, membership in country clubs. Who would not want these things!
Another reason why you need to stop living paycheck to paycheck is to protect yourself in case of a financial disaster.
Living paycheck to paycheck also means that you are relying on your job/employer for your income and you always run out of money. The problem with that is that you are in deep trouble when an emergency comes.
You could lose your job. If you lose your job, not only you won’t have a paycheck to cover your monthly expenses, but also you have no cash reserves. You need an emergency fund to help carry you over possible short-term loss of income.
You could also be sued for damages if you are in a car accident. These things happen every day. Avoiding the vicious cycle of living paycheck to paycheck, thus having lots of money can protect you from these hazards.
Signs that you are living paycheck to paycheck
Living paycheck to paycheck is not hard to identify. Here are some signs that might suggest you are living paycheck to paycheck.
1. If your checking account always drop below zero before your next paycheck rolls around, then you are living paycheck to paycheck.
2. If you haven’t saved enough money for retirement or your children education than you are living paycheck to paycheck.
3. You are living paycheck to paycheck when you have no insurance whatsoever, whether it is car insurance, home insurance, health insurance, or life insurance.
4. You can’t pay your bills every month.
5. You have no savings.
6. You rely on credit cards to cover your expenses until the next payday.
7. Your salary is not enough to keep you from going into debt. I f you see yourself borrowing money from friends, family, to make ends meet, no matter how much you try to save and even if you are not spending money, then you are living paycheck to paycheck.
How to Stop Living Paycheck to Paycheck
1.Create a Budget
You are living paycheck to paycheck because you are not budgeting or are not making enough money to cover your expenses. The first step to stop living paycheck to paycheck is to create a budget. A budget helps you understand where the money goes. It shows you if you are spending more than you can afford. It helps you direct your money where it matters the most.
2. Cut Cost or Spend Less
Once you create a budget, you need to start to cut cost or spend less. This will allow you to have some extra money at the end of the month. For example, you might want to get rid of cable TV, which normally costs you around $130 a month. You might consider bringing lunch to work instead of eating out. You might want to making your own coffee instead of spending $100 a month on coffee at Starbucks.
This extra money can help you to pay off debt fast. Once you pay off your debt, you can start putting some money into an emergency fund.
3. Save Money After Each Paycheck
The main reason why you are living paycheck to paycheck is because you have no money saved up. So the key to avoid living paycheck to paycheck is to put aside in an emergency fund some money after each paycheck, no matter how little.
Even putting aside $50 after each paycheck can make a difference and can relieve worry and pressure. Having an emergency fund is the key to end the living paycheck to paycheck cycle.
Start saving your money by opening a savings account.
4. Obtain a Part-time Job
A part-time job can help you save more money, help pay off debt faster, thus breaking the living paycheck to paycheck vicious cycle.
There are some side hustles you can do to bring home extra money.
- Start a blog. If you’re interested in starting a blog that makes money fast, I created a step-by-step guide that will help you start a blog of your own for cheap, starting at only $3.95 per month (this low price is only through my link) for blog hosting. In addition to this low price, you will receive a free blog domain (a $15 value through my Bluehost link if you purchase at least 12 months of blog hosting.
- Take Surveys. If you want to make extra cash, I suggest that you take surveys online. I recommend, Pinecone Research (earn minimum $3 per survey), InboxDollars ($5 sign up bonus + get paid to take surveys), Ebates (earn up to $40 cash back). See this blog post for a complete list.
- Sell your stuff on Decluttr. Do you have CDs, DVDs, Blu-rays, old cell phones and games you don’t want anymore? Then sell them through Decluttr! Decluttr is the fastest and easiest way to make extra cash by selling your unwanted CDs, DVDs, and more.
- InboxDollars pays you in cash to watch fun videos, take surveys, play games, shop online, search the web and more.. They’ll also give you a $5 bonus for free just to give it a try. By spending just 5 to 10 minutes on your free time, you can earn $50 to $70 a month with InboxDollars.
- Sign up for a website like Ebates where you can earn CASH BACK for just spending like how you normally would online. Also, when you sign up through my link, you’ll receive a free $10 gift card bonus to stores like Macys, Walmart, Target, etc.
- Sell your photos on shutterstock. Do you like to take photos for fun? Why not get paid for it? Shutterstock is a marketplace that allows you to sell your photos.
- There are many other side hustles listed in my post 16 Proven Ways to Make Money Fast.
5. Pay Off Debt
Another way to stop living paycheck to paycheck is to get out of debt. The more debt you have, the more likely you are living paycheck to paycheck. That means you cannot have any extra cash because it all goes to pay off debt.