It is Thursday, one week until you get your next paycheck. You are stressed out and worried about how to pay for gas and your kids school pictures. So, what do you do, you swipe the credit card!
I am here to tell you that is NOT a good idea!
Living from one check to the next is not a fun way to function. It is stressful and creates worry and fear all at the same time. If it is truly SO bad then why do so many of us fall into this trap?
Statistics tell us that over 75% of Americans are barely getting by and are living paycheck to paycheck each and every month.
So, how do we break the cycle of craziness and become the incredible 25% who are actually living within their means?
Take a look at the steps below.
Six Steps to STOP Paycheck to Paycheck Living:
1. You need a budget!
I know you think you don’t but you actually do. Budgets keep you in line when it comes to spending. It allows for things you need, and even some things you want.
I am pretty sure that most people probably believe that a lack of money is the problem. However, in most cases poor management of the money you actually bring in is the true problem.
Although more money is always nice, often times if you will take a very close look at what you are making you will find that there is enough to pay your bills AND do fun things.
A budget will tell your money where to go each and every paycheck. You will never wonder where it went. If this is your first rodeo with budgeting I highly recommend Dave Ramsey’s The Total Money Makeover. You can read my story here about how it changed our lives financially.
I’ll let you in on a little secret. A budget has a tendency to give you a RAISE. Don’t get too excited here. It isn’t that you are making more. It is that you are now telling your money what to do, rather than wonder where on earth it went?
If you have never done a budget I promise it won’t kill you and yes, you still get to eat out when you budget for it!
Check out this post: What is a Budget and Why You Need One
2. Get rid of all of your debt
Debt is killing your budget, your financial life and causing you to feel broke! It is wasting money that you could be using for tons of other things like retirement, college funding, vacations or anything else you would like to spend money on.
If you have a car payment, pay it off as soon as possible! The same goes for credit cards, school loans and medical debt. Get rid of it all! Debt is like an anchor that drags you under water. You are drowning and it is time to let it go so you can breathe again.
Buckle down, get serious and pay it all off! You will never, ever regret it. Especially when you are sitting on the beach on vacation!
3. Set up an emergency fund
We lived for years without one of these and it scares me to death now to think about it.
Statistics from a study by Go Banking Rates done in 2016 showed that 34% of adults in the US have NO savings. An additional 35% only have several hundred dollars and only a small 15% had $10,000 or more.
I feel blessed to have more than $10,000 in savings but there are times that I feel it isn’t enough.
When you consider that you have NO idea what tomorrow might bring you NEED money put back.
Emergency funds keep a minor $500 car repair, hot water heater issue, or broken dryer from suddenly becoming a life changing event!
When you have money in the bank that is set aside for emergencies then when your car breaks down, you can just go fix the car. Even better, you don’t have a knockdown, drag out fight with your spouse over money.
Emergency funds make life easier and cause problems that come up to be minor inconveniences. Everyone experiences surprises and everyone needs a fund in place to catch the rain that IS going to fall.
4. Spend less than you make
This is a tough one no matter what your financial journey.
If there is anything I have learned over the years it is this one fact.
“Things” do NOT make your happier.
Money is nice and I have lived both with and without it. It definitely makes life a bit easier when you have money. However, the things you purchase with your money will never make you truly happy.
So, if you see that you are spending more than you make, I challenge you to create a plan to spend less than you bring home.
Pay attention to what you are spending money on. Often times, we don’t really think when we spend.
Be careful about fast food and thoughtless purchases. Starbucks should be named “Five Bucks” since most of their drinks cost that amount. Stay away from spending on things that you can just as easily get at home for much less.
Check out this post:
5. Create or find a Side Hustle.
We would all like to have additional cash coming in from somewhere. Don’t wait until you get laid off from work! Start now!
Brainstorm a way to generate money on the side. Now, if you have debt, then I reccomend putting all of your side hustle money towards paying that debt to zero. However, after that, this will be money that is not put into your budget! You don’t pay the electricity or water bill with this. You don’t use it for groceries. This is for savings alone!
If you already have an emergency fund put it towards your next vacation. Another idea is to fund retirement with it. The only rule is you do NOT use it for bills!
No matter who you are, I am confident you do not want to live paycheck to paycheck. I have been there and it is much more fun to have emergency funds, vacations paid for, retirement that is fully funded and all bills being paid. There is no comparison!
6. Here’s the BIG KAHOONA!! STOP Trying to Impress Those Around You!
it is time for you let go of what others think about you. The sooner you get rid of the mentality that you need to impress your friends, family and even people you don’t know, the sooner you will have more money.
What good is it to have a $50,000 car that impresses people at a stop sign that you have never even met – if you can’t pay your mortgage or electricity bill?
*I have a big news flash for you:
My beautiful, white, immaculate, 2009 GMC Yukon XL that I purchased used in 2015 in CASH gets me to where I need to be each and every day I put it in drive. It still has gobs of miles left and hauls my girls and their friends everywhere we need to go. We have traveled thousands of miles on family vacations in it very comfortably as well.
The truth is, I don’t care what people think about what I drive! My SUV is a gorgeous, previously owned vehicle that I chose to buy because I could afford to pay cash for it.
“Your pride will kill your financial freedom WAY faster than anything else will!”
One of my favorite books on this very topic is called, Love Your Life, Not Theirs, by Rachel Cruz.
It talks about this very thing! Click on the link above to snag a copy. It is a fantastic read!
No more excuses! Let’s make this the year you dominate your financial life!
Be sure to comment below on ways you have learned to get past the paycheck to paycheck lifestyle. I also invite you to subscribe below so you never miss a post from Crazy Money Mom!