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There is nothing more stressful than coming home from a long day of work and not knowing how you will afford to pay your bills. If this sounds like something happening to you, then it might be time for some changes.
In the U.S., 54% of people are living paycheck to paycheck.
This article will go over how to stop living paycheck to paycheck.
Stop Living Paycheck to Paycheck: 25 Tips
Tip #1: Determine Where Your Money Is Going
The first step to stopping your paycheck from constantly running out is figuring out where all of your money is going. Track every penny you spend for a month using an app like Mint.
You will see where you can cut back and save some money. Awareness is critical here.
Make sure you use my free budget template to get you started on tracking your expenses.
Tip #2: Eliminate Unnecessary Expenses
Eliminate any unnecessary expenses.
Here is a list of ordinary expenses that cause you to live in the paycheck to paycheck cycle:
- Fast food trips
- Restaurant eating
- Expensive gym membership
- Coffee at the cafe
- Another pair of shoes
- More clothing
There are many ways to cut back on your spending, and it will likely take a bit of effort on your part. You don’t have to eliminate these above expenses completely.
Being 1% better every day is the way to financial independence. Begin by making temporary sacrifices that are small and sustainable. If you stop spending on everything you like, you will probably relapse and accumulate more debt.
Tip #3: Negotiate As Many Expenses As Possible
One way to save right away is to negotiate your expenses.
Many people are afraid to negotiate their expenses, but it can save you a lot of money in the long run. If you don't ask, you'll never know whether or not you could have gotten a better deal.
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Tip #4: Eliminate Any Unused or Unnecessary Subscriptions
Go through all your spending and see if you can do without one of your four streaming services. When you eliminate a $10 per month, you will save $120 per year, and if you do that ten times, you can save thousands each year and make real progress toward your savings goals.
Tip #5: Sell Any Unused Items Around the House
If you haven't touched something in the last year, it is likely time to sell it. Have a yard sale if you have many items or use Facebook Marketplace or Craigslist. Having a less cluttered house is totally worth it, and the extra cash doesn’t hurt.
Tip #6: Look Into Side Hustles
If you're looking for a way to bring in some extra money, then consider starting a side hustle.
The great thing about having a side hustle is that it can help you make extra money without making any drastic changes to your current lifestyle. Millionaires have an average of 7 streams of income. Never rely on your 9-5 job solely. An extra job can help you break this vicious cycle.
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Tip #7: Write Down Specific, Actionable Financial Goals
If you don't know where you're going, it can be hard to get there. And when it comes to your money, this is undoubtedly true with financial goals.
You will break the cycle of check-to-check if you set your mind to it. Your financial situation can change if you write down your goals and change your spending habits.
Tip #8: Reduce Impulse Spending
Avoid spending the cash if a purchase is not part of your regular monthly expenses or spending plan.
As discussed earlier, the easiest way to add new debt to your life is to spend more money on unnecessary things.
Put your cards in the sock drawer or only use cash. Paycheck to paycheck life doesn’t have to be forever, yet you need to laser focus on your spending habits.
Tip #9: Reduce Your Utility Bills By Being More Efficient
One of the easiest ways to save is by reducing your utility bills.
Not only will this help you reduce how much electricity and water you use, but it can also lower your monthly bill as well. Plus, making these changes won't require any effort on your part either.
Tip #10: Make a Plan to Pay Off High-Interest Debt
If you have high-interest debt, it's crucial to plan to pay it off as soon as possible. Credit card debt can quickly spiral out of control and become difficult to manage.
Go after the account with the highest interest rate first and move on to the next one. Start paying every extra bit of money toward this to pay the debt faster. Do your best to break the cycle of only paying the minimum payment.
Tip #11: Educate Yourself on Personal Finance
One of the best ways to improve your finances is by educating yourself on personal finance. The best way to do this is by reading books about spending money, saving money, and prioritizing debt payments while breaking the paycheck to paycheck cycle.
- Rich Dad, Poor Dad by Robert Kiyosaki
- The Richest Man in Babylon by George Clason
- The Death of Money by Jim Rickards
Tip #12: Be Prepared to Make Sacrifices
Being debt-free means you will need to stop spending money in various areas and increase your monthly income.
Get a part-time job. Avoid that big purchase until next year. Spend money on essentials and have money saved for unexpected expenses.
These sacrifices will help you avoid financial disaster, and when you have more money, you will probably have less stress. Living paycheck to paycheck makes everyone have anxiety.
Tip #13: Stay Focused on the Big Picture
Remember the reason why you want to have financial freedom and not live paycheck to paycheck.
Is it for that vacation to Italy you’ve always wanted to take? Is it for your kids? You can give them more money tips than you received when they are older. Or is it to become a digital nomad not stuck to any location because you have your living expenses by online income sources.
Whatever your reason, remind yourself of it daily to not feel aimless. I recommend making a vision board to remind you why more cash is the only way you will break free from the paycheck to paycheck life.
Tip #20: Only Use Credit Cards When Absolutely Necessary
Someone recovering from alcoholism does not frequent the bars to hang out with old friends. They avoid the bars and go to meetings to stay sober.
Leave the credit cards in the sock drawer if you don't have discipline. Do not keep them near you. You will relapse and blow your emergency fund on something silly.
Know thyself and act accordingly.
Tip #21: Automate Your Savings and Expenses
Set up a system where your expenses are automatically taken out of your bank account each month, and your emergency fund contributions are automatically transferred to your high yield savings account.
Automating takes the guesswork out of budgeting and will ensure that you're always on track with your finances. It's also a great way to ensure that you never miss a payment or contribution.
Don’t attempt to do this manually with your checking account, or you will invariably put off your savings goal and use your paycheck for something else.
Tip #22: Give Minimalism a Try
Instead of keeping up with all the latest trends and material items, you'll only keep what brings value into your life.
Sound like an impossible task? It is at first and will be easier as time goes on and can be pretty rewarding in the end.
Last year I eliminated about 80% of my clothing and shoes. Now I only have what I need, and I feel very relieved.
There were too many options, and now oftentimes, there is only one option. Easy decision.
Tip #23: Reward Yourself to Help You Stay Motivated
Don’t deprive yourself when working toward paying off credit card debt. Make sure you are saving money for some enjoyable parts of life.
Tip #24: Live Below Your Means
Your pay must be higher than your expenses. Make sure lifestyle creep doesn’t set in, and you have a surplus at the end of each month.
Tip #25: Buy Secondhand When Possible
With Facebook Marketplace and Craigslist, you can buy nearly everything used. Everything I have bought used was in excellent condition, and I saved a lot of money.
It’s Time to Break the Paycheck to Paycheck Cycle With Better Spending Habits
You have the tools to stop living paycheck to paycheck. Now it’s up to you to use these tools and begin improving your life.
You can do it.
As a certified credit counselor and syndicated writer at MaxMyMoney, Max has coached over 250 Millennials to help take the stress out of money. When Max is not coaching, you'll find him reading financial books, indoor cycling, or visiting local pawn shops looking for swiss-made watches.