When you’re barely earning enough to meet all your bills and other financial obligations each month, you might feel like you’re backed up against a wall with few options to make a change. However, there are quite a few things you can do to improve your money situation. Here are six tips to stop living paycheck to paycheck – for good.
1. Create a Budget
If you’re living paycheck to paycheck, the biggest thing you can do to break the cycle is to make a budget. Start out by assessing how much take-home pay you can expect in a typical month, then start deducting all your typical monthly expenses. As you get to things that aren’t as pressing, such as going out to eat or weekend entertainment, you can give yourself a set amount that you can spend each month without going over what you earn.
There are many ways to try and stick to your budget. You can use mobile apps that track your spending, old-fashioned pen and paper, or even the cash system. Simply take out enough cash to cover those negotiable expenses, and don’t let yourself access more money if you run out before your budget resets.
2. Automate Your Savings
Creating a savings account buffer is one of our best tips to stop living paycheck to paycheck. That way, when you have an unexpected expense pop up, you’re not thrown completely for a loop. Even better, you won’t have to search for alternative ways to pay for those emergencies, like a credit card or payday loan.
The easiest way to start saving is to automate the process. Set up an automatic transfer each payday with your chosen amount. Your bank will automatically transfer funds from your checking account to your savings account. Even starting with $10 a paycheck can help. Then slowly increase the amount as you adjust your spending to match your new savings habit.
3. Start a Side Hustle
Depending on your job and financial responsibilities, you may need to earn more money. While you can always ask for a raise or extra hours at your job, you can also diversify your income with a side hustle. Explore your hidden talents and think of ways to earn some extra cash outside of your typical work hours. You can drive for a ridesharing service, deliver food, shop thrift stores to resell items on eBay, or tutor after school.
There are countless ways to create a side hustle that helps you make more. It also gives you a greater sense of financial security as you get away from living paycheck to paycheck.
4. Live on Less
As you analyze your money and spending habits, look for ways you can cut back on expenses. Start with the fluffiest expenses, like recurring subscriptions. If you’re a member of multiple streaming services, for example, you can pick just one (and get rid of cable while you’re at it). You may be surprised at how much you can cut out of your budget with multiple small-dollar items, rather than just a few big-ticket items.
5. Plan Ahead
It’s important to use these tips to stop living paycheck to paycheck today, but it’s equally important to help get your financial footing in check for the future as well. As you start to reconcile your spending versus your saving, remember to put money away for long-term goals such as retirement. Even if you don’t earn a lot today, you can still save for retirement on the smallest of budgets. If you begin now, you’ll accumulate quite the nest egg even if you start small.
6. Improve Your Credit
The better credit you have, the better credit terms you’ll receive if you ever do need to borrow money. Ideally, you’ll save enough to help during a financial crunch, but if you do need to take out a loan or credit card, having good credit can save you a lot in interest. It can even open the door to better options so you don’t get stuck using a predatory lender with excessive rates and fees.
You can repair your credit on your own by reviewing your credit report and disputing any inaccuracies. However, you can also hire a professional for faster, and typically better, results.
Sign up for a free consultation with Ovation Credit to see how you could potentially benefit from professional credit repair help. You can quickly stop living paycheck to paycheck with the right team behind you.