If you keep up with the news, it could feel like everything is bleak nowadays, particularly when it comes to the financial industry.
Uncertainty about our collective financial destiny is understandable given the closing of banks, interest rate hikes by the Fed, and the will-we/won’t-we specter of an impending recession.
You may feel as if you’re having difficulty moving forward in life as the cost of living keeps going up. It’s alright if you are; you’re not alone yourself.
In actuality, more than half of all Americans are presently struggling to make ends meet.
Nevertheless, with proper preparation and strategy, it is possible to achieve financial independence and cease living paycheck to paycheck. The following are best practices to adopt to stop living a paycheck to paycheck life.
Establish a budget
Harrison Tang, owner of Spokeo tells us: “First things first. Are you even aware of the monthly expenses you incur with your paycheck?
You want to know where every single dime goes, not whether you have any clue. If not, it’s time to begin creating a budget.
Like toothbrushes, everyone needs a budget. It’s only excellent financial hygiene to manage your money by assigning each dollar a purpose and keeping a daily tab on your expenses!
I promise that you will become aware of spending patterns you were unaware of. (How much did I spend last month on dining out?) After that, you may make the necessary adjustments to take care of the essentials and start making plans for the future.
Another way to look at budgeting is as a personalized financial organization. Additionally, if you’re living paycheck to paycheck, you should organize your finances. Do not postpone it. Make your first financial plan as soon as possible, like now!”
Establish an emergency savings account
If you’re living paycheck to paycheck, you may have just had a broken air conditioner or a layoff away from a major emergency.
You thus need an emergency fund! It serves as a safety net for those unplanned events in life.
Save $1,000 as soon as you can to start. Although it may seem like a lot at first, you’ll be able to save up more quickly than you would have imagined after you’ve eliminated certain costs from your budget.
Actually, the majority of people in the US can save $1,000 in only 30 days!
And trust me when I say that you’ll sleep much easier at night knowing you have this cushion between you and life.
Get rid of high-rate debt
Isla Sibanda, founder of Privacy Australia shares: “It may seem impossible for you to escape debt if you’ve accrued thousands in credit card, student loan, or auto payments.
You may think that the job is unachievable if you have a poor credit score and exorbitant interest rates.
Although it seems daunting, there is a solution.
You may determine how much you can afford to contribute to debt repayment by using your budget; the key is to make a little additional payment each month without going overboard.
In real life, this may mean trading in your morning Starbucks for a Keurig cup at work or a drip coffee at home. You can use the additional money you save on non-essentials to pay off debt.”
Take up a secondary project/side hustle
Increasing your income isn’t always the simplest solution. The gig economy might be your greatest friend if you need to boost your monthly income in between paychecks.
It’s rather simple to earn additional money with a side gig, regardless of your location, skill level, or schedule; all you need to do is put in the effort.
The tried-and-true part-time employment is still very much in the cards, but serving or baristas usually entails a more set schedule.
If you’re looking for flexible employment options, you could work as an Uber or Lyft driver (which is a great way to pay off a vehicle loan), stagehand at your neighborhood theatre for a few hours, or pick up groceries for Instacart.
Having a side business is a terrific method to bring additional money into your bank account, which you may use to pay off debt by paying off loans, or you can use it to add to your savings in case of unforeseen costs.
Control your impulsive purchases
Unintentional purchases have the power to destroy even the most carefully crafted budgets.
Take yourself out of the retail temptation trap if you are an impulsive shopper who visits Target for two items and accidentally ends up filling the cart and spending $100.
Try placing an online purchase for just what you need and picking it up curbside, if it’s available.
However, if you like browsing e-commerce websites and often find yourself adding items to your virtual basket that you didn’t want to purchase, stop right now.
Delete the app from your phone and take out your payment details from the website.
Everyone periodically purchases unforeseen products, so set aside money in your budget for extras. For instance, you may choose to take out $50 per week for discretionary expenditure from your checking account. It will make you feel more liberated than constrained.
Obtain guidance from experts and individual assistance
Carl Jensen, owner of Compare Banks says: “You may choose to seek expert advice when you’re having trouble closing the money flow gap between your income and expenses.
Counselors who have received training and accreditation, for instance, work at the National Foundation for Credit Counselling.
They will analyze your budget, identify the issues that have been preventing you from moving forward, and provide a personalized action plan at no cost to you.
In terms of individual assistance, it might be challenging to change on your own. If you live with a partner or family member, let them know what you’re working on and solicit their advice and support.”