If you’re living paycheck to paycheck, then you aren’t alone. Over two thirds of US citizens are in the same boat. Being in this position can leave you vulnerable if some unexpected expense were to crop up. This may keep you up at night wondering how you would be able to deal with a large expense or even the loss of your job. Here are some tips to help you break the cycle of barely making ends meet each month.
The first place to start is to create a budget. This may sound simpler than it is in reality. You may have heard this piece of advice before, and didn’t think that it was worth the effort. The key to creating a budget is to be realistic about your monthly expenses. Pull out your most expensive bills from each month and factor them into the equation. For example, your heating bill is likely higher in the winter. You need to budget this amount each month in order to be able to pay all of your bills.
What to do in the event of a financial emergency is another thing to address if living paycheck to paycheck. While tapping into savings is the first-step go-to, it’s not an option for everyone. If this is the case, avoid payday loan lenders and instead see what is a payday loan alternative available for your individual situation. It could be an installment loan with more reasonable repayment terms. Or, it could be borrowing from a friend or family member. Whatever the way, it’s important to take the repayment process seriously to avoid making an existing financial obstacle even bigger.
Identify any shortfalls. Ask yourself if there are ways that you can work to fill these gaps. You might be able to call your service provider and request a lower rate. Consider downgrading to a lower tier of cell phone plan or TV package. This can save you a little bit of money on your monthly expenses. There are also programs that can provide assistance if you’re struggling to pay your heating or electric bills. This would be a temporary solution until you were able to develop a more long-term fix.
Stop making unnecessary purchases. You may have to cancel or freeze your credit cards until you get a better handle on your financial situation. Make your own coffee in the mornings and pack your own lunch for work. You can save a significant amount of money each month just by looking at your spending habits. Decide if what you want to buy is really worth the extra expense. If it isn’t something that you’re going to be able to use more than once, it might not be worth the hit to your budget.
If you’re still struggling to make ends meet even after all of your changes, it may be time to consider earning more income on a monthly basis. Ask about the possibility of taking on extra responsibilities at work in order to get a pay raise. If you’re capped out at work, there may be other jobs that would be willing to pay you more money. You may even want to consider going back to school so that you can get a better job. Some people decide that taking on a second job is one way to increase their monthly income. Just make sure that you don’t take on too much and burn yourself out.
When you do have some extra money each month, open up a savings account. This provides you with a buffer in case an unexpected expense hits you hard one month. You may want to include a savings goal in your monthly budget. Consider this your emergency fund, or even a way for you to make those unnecessary purchases.
You don’t want to be stuck in the cycle of living month to month forever. This type of existence can quickly get you into financial trouble. Build some flexibility into your financial situation. This means that you need to take charge of your financial future and plan ahead.