I know you probably read at least one thousand fantastic articles about the abundantly used topic above. It was most likely based on helping anyone struggling with money avoid living paycheck to paycheck. Can people read this fantastic article and say, that’s it next month I will not live paycheck to paycheck? While many of the tips and strategies the person took away from the publication can be implemented. Is it safe to say that many people cannot make the behaviors stick? Which results in the past paycheck to paycheck life being repeated again in the future? Granted ideas are a dime a dozen and it is up to the person who wants to improve to make the ideas stick.
The purpose of this post is to get you to a think of the why reasoning behind the lifestyle you dislike, and move you to another lifestyle. If you can’t understand the why, then you will not take action. Without action nothing changes.
How to Avoid living Paycheck to Paycheck: (Mental State)
Do you struggle with finances and barely have enough left over at the end of the month
Can you change for the sake of being less worried and stressed?
Will you implement all the different ideas you are currently not doing
Are you constantly borrowing from credit cards to make ends meet?
Do you always use the I can pay them next month excuse?
Are you ready to take action steps in order to complete the process?
If you answered yes to most of the questions above then you are ready to be begin the action steps below. The finances will change and you will feel a sense of relief as worries just float into thin air.
How to Avoid living Paycheck to Paycheck: (Action Steps)
Save a small buffer in the checking account of at least 100 – 200 dollars?
Vow to never go below the 100 dollar buffer.
Open an online savings account linked with the checking account, with direct deposit, (Pay yourself first $25-75 Dollars)
Avoid unnecessary shopping until you can recover from this cycle.
Cook at home and bring in lunch to work every day for at least 3 weeks.
Learn how to use cash, leave credit cards at home when out and about.
Go on spending freezes for a week or more.
Track what’s been spent the current month to see where its all going.
Increase income any way possible.
If you do these action steps for a period of time I can guarantee you will be free of the horrific paycheck to paycheck cycle. It worked for me in the past by following these exact steps. Living paycheck to paycheck instills a nervous feeling that does not go away until you can successfully get out of it. As always if you stick to the program you can later have greater sense of financial security.
Granted you might need to buy bigger than normal expensive things, like appliances. Hopefully you can get out of the cycle, save at least 3 months of emergency savings, and use that as the appliance money. Then immediately after buying said product, you will increase the savings fund back up to the original amount. Having this fund will alleviate stress, and help to avoid adding new debt due to emergencies.
The Benefits of Not living paycheck to paycheck:
- -The knowledge to live below means.
- -The maturity to see money and withhold from spending it
- -Accomplished a major Financial goal 80% of Americans can’t
- -Completed a stepping stone before dipping into long-term investing
- -Less financial worries and stress
Comment if you have any tips we can successfully use on how to avoid living paycheck to paycheck?
Rich Uncle EL
I usually tell people in this scenario that the easiest path forward is to find ways to bring in additional income. Cutting spending is great, but people often fall into old patterns eventually.
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I agree with increasing income as an action step to break free of the cycle, but first and foremost, people must get in the right mindset to change. Because no matter the income level you have living paycheck to paycheck is a problem with the person's behaviors not the math based on earning more. Thanks for the comment.
Great tips EL. I tend to fall on the side of cutting spending rather than increasing income as a first step. Income takes time to produce, but most people could easily cut $500 from their monthly budget tomorrow (cancel cable, lower cell phone, cut grocery budget) without much effort at all. But they might keep spending for 2-3 months while looking for a second job.
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Yes I agree creating a new income stream can take longer than cutting back. I hope to one day create 4 income streams that will cover all my expenses and a 15% buffer to cover inflation. Thanks for the comment Ryan.
What really worked for me is tracking my spending and then slowly making changes. I found going "cold turkey" was too difficult. So every week or month I tried to make one change and stick with it. After about a month or two I stopped noticing and it just became the norm. For example, I set a $30/week grocery budget, then I started to bike to work, then I cancelled my gym membership, then I negotiated my insurance etc etc. and slowly I was able to cut $100s from my monthly budget!
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That is a good strategy Thomas, once the behaviors stick they become a routine. On top of them being good behaviors, they save you money as well. That is a win win my friend.
The buffer is good advice. I know a few people that turned to payday loans and could not escape. Living paycheck to paycheck turns into living loan to loan.
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Having that buffer can dissolve many minor emergencies that pop up from time to time. The savings account separate from checking will help establish the real emergency fund to help anyone avoid the paycheck to paycheck life.
I was living paycheck to paycheck and sometimes I even borrowed money from my mom because I don't have enough money. But I want to change, especially when it comes to money, I know I made some mistakes before and I will make it as a lesson. And I prefer to use cash until now.
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Hey as long as you learned the lesson, thats the important part. Take 1 small step everyday to avoid living that lifestyle and you will never regret it.
It really takes some deep introspection and some hard steps to break out of this cycle. A lot of our money and spending habits have been ingrained over years, so you're not going to stop them all at one time. Best to pick one bad habit so you can get a quick win and then tackle the rest. I really like the idea of initially listing all of your expenses and deciding what can be cut or reduced easily. Then use those savings to add to your emergency fund or debt repayment.
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It does take a lot to change bad behaviors, but once someone sets their mind to be more financially stable, they will do anything possible to avoid living that way. Thanks for the comment.
I believe that it is an emotional shift that did it for me. Basically, some people are "avoider" and I would just not look at my finance.
But after reading "The Richest Man in Babylon" and getting a coach I am now saving 30% of my income and 20% goes to pay my debt.
Surprisingly enough, it's easy and fun.
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I agree Renaud if you don't avoid, anyone can tackle issues head on. I like controlling where my money goes, and I don't spend it just because it is in my hands. Thanks for the comment.
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Many peoples were blacklisted by banks because of credit card in my country. It's very hard to educate peoples and they will repeat the same mistakes over and over again from next generation to next generation. Also they spend unnecessarily. They already know about financial education.They don't have discipline to save their own money.
That is unfortunate to be black listed. It will help people to just stay true to their lives when money is tight. Good luck
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