5 Tips to Stop Living Paycheck to Paycheck

5 Tips to Stop Living Paycheck to Paycheck
  • Opening Intro -

    Unless you're explicitly taught how to manage money and build wealth, it can be a slippery slope for many people. Between credit cards, student loan debt, and those pesky impulse purchases, money management tends to be a really hard lesson for many.

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If you’ve been in a cycle where you’re constantly living paycheck to paycheck, this can be exhausting. Don’t get discouraged if you feel like you’re in a never-ending cycle. Once you make the choice to change, follow that choice up with the following five tips.

1. Develop a Reliable Budget

At the end of the month, sit down to plan your finances for the following month. You’ll want to line up the due dates for your bills to make sure you have the money to cover those costs by those deadlines.

If you have irregular income each month, there are techniques to create some stability within the fluctuations. Utilize these techniques in order to stabilize yourself.

Companies like Ottopay can help you break up the bills into smaller increments that are easier to manage throughout the month. Money is a tool that will work for you when you learn how to manage it correctly. If you don’t maintain a consistent budget that you actually stick to, you’re already in a losing battle.

2. Create an Emergency Fund

As quickly as you can, begin to set aside money in an emergency fund. Build up the emergency fund to $1,000. Whether you have a flat tire, a broken stove, or a family emergency, you can use that money to cover your expense without falling back into the trap of living paycheck to paycheck.

It might take some time to build up to that amount when money is already tight. Place the money in a separate saving account that you can’t easily withdraw from without a deposit slip.

However, make sure it’s easy to add money into that account so that you’ll always add to it. Whether it’s $20 per paycheck or $100 per paycheck, treat this fund as a bill and pay yourself.

3. Launch Multiple Streams of Income

There are many people who live paycheck to paycheck because they don’t even have enough money to cover all of their needs. This is a really difficult and stressful space to be in.

As tough as it is, you’ll have to create additional streams of income. Even if you set a goal to create two new income streams over the course of the next year, this can improve your financial situation immensely.

Start by looking at what you have in your home that’s not in use. Use your smartphone to take photos of those items. List them on reselling websites.

When an item sells, put the money into your savings account. Reselling is a perfect income stream for someone who doesn’t have hundreds of dollars or a ton of time.

Take a look at some of the hobbies you’re really good at. Consider monetizing those hobbies by selling products, baked goods, or digital offerings.

As you develop your skills, promote your items/services, and remain consistent, you can build additional streams of income that you can funnel into your living expenses bank account, emergency fund, or other investment opportunities.

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4. Plan Your Purchases

Take a look at where your money goes each month by looking at your bank statement. If you notice that always tend to buy coffee every morning, make the drink at home, or set aside a budget for it.

If you love going to the mall on Fridays, set aside a certain spending allowance to cover your expenses in cash. Once you’ve spent the allowance, do not purchase anything else.

If you know that you’d love to take the children to Disney World next year, plan ahead by calculating the total costs and save up. When you plan ahead, you’ll feel less rushed and pressured to spend outside of your means.

5. Set and Execute Short-Term and Long-Term Goals

When you’re in the rat race, it never ends. However, when you create multiple streams of income and get better-paying jobs, you can experience a different type of lifestyle.

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Still, without concrete steps and a plan, that lifestyle will remain a dream. Set short-term goals and long-term goals that excite, inspire and rejuvenate you to keep going. Sometimes, an accomplished short-term goal will be the motivator you need to fuel the rest of the process.

If you’re used to living paycheck to paycheck, know that the shift also requires you to change your mindset and your behavior. Breaking bad habits can be tough.

This is why it’s wise to focus on making the best decisions in the present moment. With each positive change, you’ll be able to become more confident in your ability to break the cycle, conquer your finances and change the trajectory of your life.

Image Credit: tips to stop living paycheck to paycheck by twenty20.com

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