We’ve been there. You want to save money but somehow it seems to be more difficult than it should be. Most importantly, you’re taking care of your expenses but have very little leftover before the next paycheck. As a result, you’re holding out until the next pay day. What if you never had to worry about living paycheck to paycheck again? The great news is that it is absolutely possible. Here’s how to stop living paycheck to paycheck (for good).
Look At Your Bank Statements & Budget
It is very important to know what you’re spending your money on. Look at your bank statements to see where you may begin to set limitations and write them down. Budget the amount of money you spend on eating out, on games or music, online shopping, etc. This will vary for each individual.
Cutting back on expenses will allow you to gain control of your routines and habits in order to pocket extra cash in case of any emergency.
Increase Your Income
There are many ways to increase your income. You may work for a promotion or raise, or take up a side hustle to earn extra money. For instance, by earning an additional $100-$300 a month will mean you’re up $50-$150 bi-weekly before the next paycheck. The catch here is to not fall into income creep lifestyle. Otherwise, you won’t be able to execute this properly.
Beware Of Income Creep
Income creep is when one lacks the will to retain spending additional income after a raise, sale, promotion, etc. As a result, you continue to live with the stress of never having enough. Income creep is the reason why people earning six figures a year also live paycheck to paycheck. If you continue to add or create more expenses as you earn more money, you will be stuck in this quicksand; a never ending loop. Delay your gratification and your future self will be glad you did!
Live Below Your Means
Living below your means is the responsible and most effective way to manage your personal finances. We’ve learned that this strategy goes hand in hand when you increase your income as they compliment each other very well.
So what does it really mean to live below your means?
To live below your means requires you to not increase your standard of living (bigger car, bigger home, etc.) as your income increases. Living below your means allows your expenses to stay relatively the same which opens opportunity to save money and invest it as well.
As you continue to practice these winner habits, you will gain an intuition and an understanding of when it is best to increase your standard of living. In the mean time it is very important that you learn how to stop living paycheck to paycheck first.
Increase All Your Monetary Accounts
The privilege to stop living paycheck to paycheck will depend on how well you manage your monetary accounts. As a result of implementing these strategies (budgeting, earning more income, and living below your means), earnings will roll over in your checking account due to the money consistently being replenished. By disciplining yourself to stay on this path, you will no longer be living paycheck to paycheck.
Stack the amount of money in your checking account in order to gain access to funds from which you can save and invest. In other words, increase all your monetary accounts. Tip: Pool money from your checking account into several accounts that will allow you to earn more income passively. More on that below.
If you’re curious on how to invest money in the stock market, check out this amazing post here. We walk you through step by step.
Other Means Of How To Stop Living Paycheck To Paycheck
Stop living paycheck to paycheck by cutting back on rent and allow breathing room to save money by downsizing. Make an effort to seek the best options regarding your long-term success. Delayed gratification will come a long way.
Pay Off Debt
By paying off debt you open up opportunities and have a chance at experiencing financial growth. If you pay off a credit card, you no longer have to worry about the monthly expense. Say you owe a small amount on your vehicle. Get a payoff quote and eliminate that expense. By freeing up this money, you can beak the monthly payment into segments and pool it into checking and savings. Stop living paycheck to paycheck by eliminating payments to lenders every month.
Generate Passive Income
Generate passive income so that your small bills are paid. What if I told you the interest you earn in a money market account can literally pay your monthly Netflix subscription? We published a post on 5 guaranteed ways to earn passive income that will help you learn more so that you can take care of your bills without tapping into your earned income. Stop living paycheck to paycheck by earning extra cash on the side.
Make It A Habit
Make it a choice and a habit to stop living paycheck to paycheck. After all, it’s in your power. Implement these strategies in order to change your life and begin feeling what it is to truly be financially free. Go back in time today and secure your financial future!