You work too hard to live paycheck to paycheck. Check out these tips to STOP living broke and start saving towards your goals!
Are you sick and tired of living paycheck to paycheck? Are you telling yourself,
“if only I made more money...then I would be happy AND I could build wealth with ease.” Errrrrr, WRONG. Income is only part of the equation. There are times where your expenses outweigh your income, but most of the time it’s a behavior issue.
The more money you earn does not necessarily mean less money problems.
The main components that make up healthy financial plans center around behavior and actions. Income is just a small component. Look at some of the celebrities who have money troubles or even claim bankruptcy (list includes 50 Cent, Nicolas Cage, and Mike Tyson among others). You KNOW they are making a lot of money on the music, movies, sports, etc. that they work on BUT they live extreme lifestyles with bad spending habits.
When your income is less than your expenses it doesn’t matter who you are, you WILL live paycheck to paycheck, go into debt, and dig yourself into a huge mess.
So how do I STOP living paycheck to paycheck and start making progress on my goals?
1. Create a Budget
Now I know you’ve heard me say this before, but this is your BIGGEST tool to gain traction on your financial goals. Haven't budgeted in a while? The unknown is scary, I know! It’s like 5 years went by and you wonder why your clothes don’t fit. Step on a scale, get a starting point, and determine what steps you need to take to achieve your goals. In your financial case, you need to start by putting pen to paper and write out all your expenses for the month. Put effort into this and really think about everything that’s coming up for the month and write it out.
Most of the time when people really start budgeting and telling their money where to go, they often feel like they’ve gotten a RAISE.
No, they didn’t actually get a raise BUT it feels like they did because they discover they have more money than they thought. STOP going through the month just paying for things as you go and wondering where your money went. That’s the reason you’re reading this blog post in the first place. START being intentional about where your money is going by creating a budget and you could be amazed on how much money you find to put towards your goals. This could be all you need to start making progress!
EXTRA: If you want a step-by-step process on how to create a budget, read another blog I wrote called "How to budget like a Champion!".
2. Cut Out Unnecessary Expenses
OK, so you created an honest attempt at your monthly budget and your income is about equal to your expenses. Well, it might feel stressful BUT this is a good thing to know. If your income is approximately equal to your expenses, then this is the reason you are living paycheck to paycheck!
So how do we fix it?
Go back to the budget and start looking at things you really need to pay for vs. things you do not. For example, you NEED to pay for groceries, gas, rent/mortgage, and utilities as those are the 4 must-haves for your budget. However, let’s say you have a gym membership you are paying for monthly but you hardly ever make the time to go.
This could be an expense you cancel or freeze so that you can free up that money and put it towards what you really want (i.e. an emergency savings fund). Now I know you WANT that gym membership because you might go someday, but just tell yourself, "this is TEMPORARY". Make the temporary sacrifice for now, build up your savings so you aren’t living paycheck to paycheck anymore and have a nice little cushion in case something happens, THEN you can reintroduce your gym membership to your budget.
At that point, you may REALLY want to go to the gym and actually use the membership so it’s a win win!
So whatever the unnecessary expenses are (gym membership, cable, restaurant money, etc.), identify them on the budget, temporarily cut them out of the budget, and put that cash towards what you really want. Combine this step with creating and sticking to a budget and you could be well on your way to building a savings cushion so you can STOP living paycheck to paycheck!
EXTRA: If you want to SQUEEZE even more money out of the budget, read my PDF freebie called "5 Secret Tricks to Squeeze Extra Money Out of Your Budget".
3. Get a Second Income
So did you start budgeting like I told you to and you determined that money is tight? Did you then try cutting out unnecessary expenses and you found yourself still stuck in a tough situation where your income = your expenses? Or worse, was your expenses LARGER than your income? If this is the case, stay calm and listen. Yes this situation SUCKS! But at least you know where you stand.
It's like working so hard to get an A+ on your mid term and you end up FAILING. This is just the midterm.
Do you think when everyone fails their midterm they fail the class?
NOPE.
It just means you have to work harder for that semester, study more, get a tutor if necessary, so that you can gain momentum and pass the class.
In your financial scenario, your current budget get’s an F on the midterm and you need to bring your grade up.
You need to get a second source of income in order to get traction on your goals. So what does this look like?
You can always deliver pizza on the weekends or get a job at a fast food place. I feel like I always see a “We’re Hiring” sign at those types of places. But you can also get creative to earn extra money and have a more flexible schedule if desired. A second source of income doesn’t HAVE TO mean you work at a fast food joint or clothing store. You can clean houses for the elderly who may have trouble cleaning their houses but also have the money to pay someone else to do it. If you love photography, you could start taking family photos and earn extra income that way. Dog walking/dog sitting is another way you could make some extra income.
Once you figure out how you want to earn extra money, add that into the budget so you can start saving money, build a savings fund, and STOP living paycheck to paycheck.
My only warning to you is that if you get a second job then make sure you keep budgeting every month and keep in control of your money. If you get lazy and stop budgeting, then your working a second job for nothing because your extra money will get spent. Remember, its temporary so long as you stick to the plan. Otherwise, you’ll work 2 jobs, still wonder where your money went, burn out, and you’ll ultimately still live paycheck to paycheck.
TAKE HOME MESSAGE:
How do you save money when you’re living paycheck to paycheck? First and foremost, BUDGET! If you don't know how, check out another blog I wrote called How to Budget Like a Champion.
Then if needed cut out unnecessary expenses. Lastly, if your money is still tight, get a TEMPORARY second job and stick to the plan.
Remember that you work too HARD to live paycheck to paycheck. Work on these three things and you will stop living paycheck to paycheck, start saving money, and start making traction on your goals!
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