Are you living paycheck to paycheck? If yes, then it’s high time that you get out of this financial quagmire. Such a stressful life is no way to live. If you do not break the cycle, you could fail to secure a safe financial future. You won’t have enough for retirement. You may even end up in steep debt.
Here is how to stop living paycheck to paycheck.
Track Your Spending
The overwhelming majority of folks living paycheck to paycheck have no clue where their money is going. If they did know, they probably would not be living this way.
Hence, tracking your spending is crucial to escaping the cycle. Knowing where your money is winding up should not be a great unsolved mystery.
You will have to sit down and take a close look at all your bills and bank statements. This will help you to account for part of your spending.
Henceforth, you should carefully note all buying. Even if you are buying coffee, you must note it down.
Smartphones make it easier to track spending. For every purchase, write down the price and the name of the good purchased in a note-taking app or Google spreadsheet. Make it a habit each time you buy.
Cut Down Costs
Once you track all spending, you will know where you are wasting money. If you are spending too much on eating out, you will have to figure out how to make tasty homemade meals.
There are certain unnecessary expenses that you will have to cross out of your shopping list. If you already have several pairs of shoes, then please do not buy that new designer shoe. The same goes for all other articles. You do not have to deny yourself. However, you should refrain from buying what you don’t really need.
Think of cheaper alternatives for expenses that you cannot avoid. You can cut the cable and opt for cheaper streaming services. Likewise, you can subscribe to cheaper online newspaper editions. Instead of eating out, you can prepare your own gastronomic delights at home for cheap.
You don’t have to be a financial wizard to make a budget. You simply have to note your income and deduct your fixed expenses (like rent, mortgage, subscriptions, etc) to find your disposable income each month.
Once you track spending habits, you will know how much you are spending each month on groceries, entertainment, attire, and so on. In your budget, you can set lower spending targets for all these categories. Make sure that these are realistic targets that are attainable.
The target setting should be gradual. Don’t make overly ambitious targets right away. Set easy targets for the next month that you can achieve without too many problems. Then for the next month, you should set another easily attainable target. Hence, you will gradually lower your spending across categories to frugal amounts.
Low income may be another reason why we are living paycheck to paycheck. Besides saving more, you should think of earning more to break the cycle.
You can think of part-time gigs like blog writing and freelance work. There are plenty of freelance websites that help you to find all sorts of freelance jobs.
Chances are, you may be earning less because of your career choice. Think about growth in your field. Find out how you can progress in your field for more income. You should do your own research, get in touch with experts and consult with friends and family over this issue.
Will you be able to earn more by qualifying? If you are satisfied with your career, you can consider taking up the qualification if it can add to your skillset for higher income.
You may even want to think of changing your job if your income is not up to par.
A career change may also be worthwhile.
In other words, plenty of introspection is necessary for realistically determining future prospects in your present career. You may have to make bold decisions like switching careers if that is feasible. Make sure that you consult experts and those you trust on this matter.
Make sure that you are managing your credit cards well. If you have too many credit cards, you may want to cancel those with the highest interest rates. This can hurt your credit score. But that is better than incurring debt.
Set up your account so that your credit card bills are paid on time. This will ensure that you don’t miss out on payments. Don’t just pay the minimum amount. Your interest costs will keep growing if you just pay the minimum.
Controlling credit card spending is not rocket science. A few good steps can go a long way.
Decide the amount that you can afford to spend each month with your credit card. You should never exceed this monthly amount.
All credit card purchases should be planned. If you suddenly want to purchase something on a whim, then stop. Go home and see if it is a good idea. If you really must buy it, then first make sure that it will not exceed your monthly limit on credit card spending. If it does exceed the limit, then put off the purchase for next month.
When you finally stop living paycheck to paycheck, you can think of investing in your future. You should save money each month and contribute to your investment portfolio.
But that is easier said than done. With our extravagant spending habits and spendthrift lifestyles, it is virtually impossible to save enough. But don’t lose hope just yet.
Doctor Money App can help you to save more money each month, irrespective of your spending habits. You, too, can curtail your monthly costs, spend frugally and save more with the app.
Download the Doctor Money App for financial freedom and security.