How To Stop Living Paycheck to Paycheck
75% of people that work 40 or more hours a week live paycheck to paycheck. It’s hard to have any real piece of mind leaving this way. While many of these people have assets, they have little extra cash on hand. living paycheck to paycheck is unstable both financially and emotionally. Pretend You Earn Less Than You Do. While it may be easier said than done, simply committing to live on less than you earn is the first step toward breaking the hand-to-mouth cycle. If you just spend less than you earn after taxes, you will have a budget surplus. Once you start having money left in the bank at the end of every pay cycle, you’ll begin to feel a little freer. You can begin stashing away some savings.
Create a Budget. To live below your means, you must know where your money’s going. Start by creating a realistic budget if you don’t have one already. Try Google Docs or an Excel spreadsheet, more sophisticated online budgeting tools like Mint.com will pull in all your financial information and send you alerts and notices.
Make Sure To Have Some Reserve For An Emergency.You have to have some money on deck in case of an emergency. Non-discretionary expenses include rent or mortgage, groceries, utility bills and insurance payments. Discretionary spending includes eating out and entertainment. Once you’ve broken your spending into categories, cut some of that discretionary — even if it’s only $100 per month — and set it aside in savings.
Save Money By Downsizing. Move into a cheaper apartment, drop the gym membership and opting to walk or jog in a nearby park, or trading in an expensive car for something more economical with better gas mileage.