How to Stop Living Paycheck to Paycheck

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According to a recent lendingClub survey, around 64% of Americans are living paycheck to paycheck. The current rate of inflation has resulted in a hike in the prices of commodities, and the federal consumer credit has reported about 29% increase in revolving debt as of March 2022.

It is easy to think living paycheck to paycheck only affects people who earn a low income, but it can also happen to people with high income.

Living paycheck to paycheck is just really hard and stressful; you want to save and invest, but you cannot; most times, you look forward to payday as though your life depends on it.

As soon as it is payday weekend, you are excited, but by the second week of the month, you are humble, broke, and looking forward to the next paycheck. 

Here are some tips and hacks to help you stop living paycheck to paycheck. These tips and tricks have helped me stop living paycheck to paycheck, and I am sure you will find them helpful.

Budget Every Month

The first thing you need to do to stop living paycheck to paycheck is to budget monthly. A few days before you receive your pay, budget it by planning how you will spend it; decide what you will spend money on that month.

Having a budget helps you prioritize. Don’t say you don’t have time; sit down, take five minutes at the end of a particular day just before you get paid, and make a budget for your money. 

Write down your rent, bills, transport, food, and other expected expenses; this will give you an idea of how much you have to spend on different things. It will help you know if you are not earning enough and if you need to find a way to earn more. 

Check Your Budget Before you Make Large Expenses

Don’t be one of those people who agree to make expenses without checking their budget. If it is something that is not in your budget, you will know because you made a budget at the beginning of the month or the end of last month before your pay came in. 

When you have a large expense to make, you need to ask yourself if it is in your budget. You also need to ask yourself if you can make allowances for it since it’s not your budget; is it urgent? Can you push it into next month’s budget?

You need to run your life as if you are running a company; run it the way you want to run a successful company. If you were a company, would you just buy or invest in things without thinking about their benefit to the company or whether the company needs them? You won’t do that. So, always check your budget before making that large expense.

Track Your Expenses

To stop living paycheck to paycheck, you must track your expenses, especially the small ones. You know the big expenses like your rent because you plan for them and do them regularly. 

But the small expenses like the 10 pounds, 20 pounds, 5 dollars, and 500 naira purchases are the expenses that you need to track; they are the things that steal your money. 

Many years back, I thought I was good with money because I do not waste money, but I still could not stop living paycheck to paycheck. 

I usually do a monthly budget, but I was still living paycheck to paycheck until the day I decided to track my expenses to the minutest detail. 

When I finished writing the small expenses, I tallied them up and was amazed at how huge the total was; it was almost as much as my rent. I concluded there and then that the small expenses are the real money stealers.

Save Before you Spend

Don’t wait till after you have spent your money to save. When making that budget before your monthly income comes, leave a category for savings. Whether you get paid monthly or daily, you should save before your income comes in. 

Have Saving Goals

If your income comes in randomly, you need to have saving goals and work towards them; throw everything at your saving goals. If you are not saving towards something, there is no motivation to save. If there’s nothing you are seeking, there will be no reason for you to deprive yourself. 

Have something you are saving for; if you are not saving to buy property, to invest, save for an emergency fund, or save to improve yourself. You can also save towards education, a course, or something that would help you grow up. 

Use Budgeting Tools

I have several videos on my Youtube channel where I have talked about the budget and saving books that you can use to stay on top of your finances. If you cannot purchase my budgeting book, you can get any random saving book or a budgeting app. 

There are various apps that you can use to budget. These apps will help you track your expenses and keep an eye on where your money is going so that you can be in the driver’s seat of your spending. Always use a budget and saving app or a workbook to stay on top of your budget.

Get Your Debt Under Control

A lot of people living paycheck to paycheck are also spending quite a bit on debt repayment. Making payments towards debt every month renders your money meaningless. It becomes like a vicious circle because you are probably paying the minimum. 

If you are owing to debt with a high-interest rate, I suggest you start thinking of how you will consolidate and reduce them. Think of how to negotiate with your lender to reach an agreement that allows you to pay off debt. 

If you don’t talk to your lender about the fact that you are struggling with debt, they will keep charging you for it and leave you in that vicious circle.

Some lenders will tell you that if you make a bulk payment, they can write off a huge portion of your debt; while some will reduce your interest rate if you agree to pay a certain amount monthly. 

You need to find a way to bring your debt under control. There are debt repayment strategies like snowballing, snowlanching, and avalanche that you can use to pay off debt. 

Have Emergency Funds

An emergency fund is a set of funds you have put aside for an emergency. If you encounter any unplanned emergency without emergency funds, you may have to use up your savings, thereby incurring debt.

If you ever need to travel or fix your car urgently, your emergency funds will be at your rescue. An emergency fund will keep you from falling into debt. Taking loans to resolve your emergency will lead to paying debts for a long time which may destroy your paycheck. 

Invest Monthly

You need to invest monthly, no matter how little. There are platforms and apps available to help you invest monthly. They are online and easy to use. You don’t even have to invest in your local economy alone; these apps make it possible for people to invest globally. 

Investment platforms allow you to invest in equities across the world. You can buy funds, S&P500, exchange-traded funds, bonds, stocks and shares, and mutual funds. They are available at your fingerprint because we have the internet for easy access. Put something away for your future every month.

Live Within Your Budget

Make sure the budget you have made is a realistic one. If you earn 2500 pounds but made a budget of 3500, you are already planning to live above your means.

 If you earn 2500, your budget should be 2500 with your saving and investment included. Also, for a 2500 income, you can have a budget of 2000 pounds and leave 500 pounds to sit in your account or go into your savings, emergency fund, and investment.

The most important thing is to live within your means. Do not budget to spend money that you don’t have. 

Avoid Using Your Overdraft.

It is an expensive way to borrow. If you must borrow, analyze what you need the money for and go to your bank for a loan. You can get a zero-interest credit card. Overdraft charges daily, especially in the UK. It looks like a small amount paying 2 pounds daily, but when you sum it up over thirty days, it shows that you are paying too much interest.

I hope these tips and trick helps you rise above the paycheck-to-paycheck circle.  

Published by ronkeodewumi

I am a Chartered Accountant (ACMA, CGMA) and seasoned Management Consultant with about 16 years of experience driving the delivery of strategic solutions to complex problems of global firms. Through my blog, youtube channel, social media, tailored courses and downloadable material, I share information, resources and tips to help you manage your money better, grow your business, progress in your career, thrive in difficult times and create a life that is safe from failure, while being the best version of yourself. You will also find here links to my youtube videos where I share more nuggets to help you achieve and live your dream life. I am based in London, United Kingdom and always happy to connect with you via email (ronkeodewumi@gmail.com), social media or my contact page here.

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