At the start of 2022, 64% of the U.S. population was living paycheck to paycheck. Do you fall into this category? If the answer to this question is a resounding yes, here are 5 things to do now that can get you out of this cycle and help you stop living paycheck to paycheck.
- Create a budget.
Look at your current financial situation. Start with knowing exactly how much money you make a month. Then, track your spending from the past month. Identify exactly where your money is going and the exact amount you are spending.
An easy way to start budgeting and to balance spending vs. saving is with a 60 20 20 budget. 60% goes to needs, 20% goes to savings, and 20% goes for wants.
Bottom line: You have to know where your money is going in order to start saving and stop living paycheck to paycheck.
- Reduce spending on your “wants”.
Once you have identified where your money is going each month, start to reduce the amount you are spending on “wants”. A want is any unnecessary thing you purchase. This includes entertainment, junk food, extra clothes purchases, impulse purchases, and anything else you don’t need in order to survive on a day to day basis.
Living below your means requires you to make more than you are spending. Read for more tips on how to live below your means to gain financial freedom.
- Use Cash
When going out, stick with cash and leave your credit cards at home. Only take the amount of money with you that you are willing to use in order to stick to your budget. This will ensure that you cannot overspend.
Do you know when this strategy can come in extra handy? When your kids are begging for a treat or toy and you are able to simply tell them that you didn’t bring the money to pay for anything extra. This takes the decision-making process away and your kids have a harder time arguing with that.
- Eat At Home
Eating out is a huge expense and while it can be fun, it’s not worth the money when you are living paycheck to paycheck. You will need a plan in order to stick to eating at home.
- Make a meal plan and grocery shop each week.
- Stick to simple, but healthy meals
- Eat leftovers when you have them.
- Share the job of cooking (and the dishes) with other family members.
- Make eating at home fun by playing music, trying a new recipe, and enjoying time with your family.
- Invite friends over to eat instead of going out.
- Say “No”
There are going to be opportunities you need to get comfortable saying “no” to. Say no to your kids when their wants are too big for your budget. Say no to events and activities when they are unnecessary. Focus on building your wealth by living below your means. This requires being able to say “no”.
It’s okay to prioritize your savings goals so that you can feel more confident in your future and get out of the stress of living paycheck to paycheck.