Living paycheck to paycheck is emotionally draining as you struggle to make ends meet. Unfortunately, it’s more common than we expected. It’s stressful to not know exactly if you’re able to pay your bills. When an unexpected expense is required, there isn’t enough to hold you through the month. For many, credit cards are the only option. Eventually, if you continue such spending habits, you might find yourself in debts and even reach a point where you can’t afford the minimum payments.
If you find yourself in this situation, know that you’re not alone. As the new year approaches, it’s time to break the vicious cycle of living paycheck to paycheck once and for all. Here are the six steps for you:
1. Create a realistic budget (and stick to it)
A well-planned budget helps you keep track of your spending and plan how to utilize your income properly. Having a budget also lets you know if you have enough money to cover all the expenses. But, a budget will only work if you stick to it consistently.
Start off by tracking your spending and know exactly what you spent your money for. You can then identify where the biggest portion of your income went to and make adjustments accordingly.
2. Set aside money to save
This might be a big jump if you’ve been living paycheck to paycheck, but it’s one of the most effective ways to kick start your saving habit. Set aside a certain amount of your salary every month, it can be as little as a few pesos and let it accumulate over time. You can do this by having a savings account and set up an automatic withdrawal so that a fixed amount of your salary goes into it. This sum of money will definitely come in handy in any case of emergency or any unexpected expenses.
3. Don’t get in debt or borrowing money
If you’re struggling to make ends meet, avoid using credit card for your expenses. It might be difficult to resist the temptation to swipe the plastic card and get what you want on the spot, but remind yourself of the consequences of being in debt. Many people fell into the black hole of spending the future money and found themselves in multiple credit card debts. You don’t want to get yourself into such situation.
Pay for your purchases with cash and if you already credit card bills to pay for, make sure you budget for that. If you have different loans to take care of, try to consolidate them to reduce your monthly interest and payment. It’s important to keep updated with your loan provider regarding any new consolidation plans to maximize your savings over time.
4. Increase your income
To break off from the vicious cycle from living paycheck to paycheck, you have to earn more than you spend. If you’re already reducing your spending and still struggling to make ends meet, consider how you can earn more instead. While there is just so many costs you can reduce, but your ability to make more money is limitless. For example, turn something you enjoy doing, like a hobby to a side hustle, get a part-timer job over the weekends for a couple of months, do freelance work, or even sell things that you no longer use or need. These are just a few ways to boost your income! Be creative and explore the countless ways to have a side income other than your monthly salary.
5. Cut meaningless expenses
Are you eating out too often, getting new clothes or shoes every week, subscribing to expensive phone plan or paying for the unused gym membership? Cut off unnecessary spending frees up money for things you truly need and enjoy.
Try writing down what you value in life. Then look at your recent purchases. Are those purchases adding any values to your life? If not, you should stop buying them. Know the difference between needs and wants, cut out the unnecessary expenses and learn to live with what you can afford.
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