Living from paycheck to paycheck is something that is experienced by more people than you think. According to a Nielsen Global Consumer Insights study that has been made, one out of four households that earn $150,000 or higher each year are in this situation. This just shows that not only those who are on the lower pay range are living from one paycheck to another, but those who are earning more too. If you feel that you might belong to this group, there are things that you can do to stop the cycle.
Recognize That It’s a Problem That Can Be Fixed
Like any kind of problem, the first step is to recognize and accept that there’s a problem and that you’re committed to do something about it. Without recognizing that there’s an existing issue that need to be fixed, it would be difficult to stop this cycle since you’re not aware that it’s actually there. Committing yourself in changing the situation is also another important thing as the process may not that easy. Discipline and commitment to your goal is needed.
Work with the Entire Family
You may be in charge of managing the money, but you’re not the only one who spends in the household. Your spouse and kids should be part of the change. Discuss the matter with your family so they would be aware about the situation. Brainstorm on what each member can contribute to achieve your goal. Getting the support and commitment of the entire family makes things easier than if facing it alone.
Re-evaluate Your Budget
Go over your budget so you can make necessary adjustments. Track where you money is going. This would help in determining unnecessary expenses that you’re making, which could be a huge factor why you’re living from paycheck to paycheck. Create a realistic budget that the family can stick to. Realistic means that it’s something that would still allow you to live comfortably. Making the budget extremely low is not necessarily the best way to go as you may not be able to follow it. A budget wouldn’t mean anything if it can’t be followed.
Cut Down Unnecessary Expenses
After re-evaluating your budget, you’ll be able to see on which areas you’re spending unnecessarily. This doesn’t mean that you would just spend money on your needs and never on your wants, because it would be extremely hard or even impossible to stick with it. As mentioned, you should be realistic. You should still reward yourself every now and then.
Cut down expenses on things that you don’t really need. For instance, if you’re eating out regularly, why not consider cooking at home instead and just eat out once in a while? You may also limit your shopping, especially on luxury items. It would also help if you stay away from window shopping. Find other productive or exciting things to do that would keep you occupied without spending much. Even if you do not intend to buy anything, you could be tempted once you see the products, especially if on sale, and you may end up purchasing something that’s not really needed.
Make It a Priority to Pay Off Debts
The interest that accumulates from your debts could be huge after a long time. If you don’t clear your debts, you may be paying them for the rest of your life, which contributes to the paycheck to paycheck cycle. If you have several debts, you may consider consolidating them or at least prioritize paying off one debt at a time. Consulting a debt management specialist to determine the best option on how to do this would also help.
This may not be an easy task since it involves lifestyle change and commitment in doing it, but it’s attainable. It’s also important to save for your emergency funds so you’ll have something to use when needed.
Features and 1st image courtesy of Stuart Miles / FreeDigitalPhotos.net
2nd image by Bill Branson (Photographer) [Public domain or Public domain], via Wikimedia Commons
3rd image by SAN_DRINO (Difficult choice.) [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons