Another Friday comes and goes, and for a lot of us that means a payday. It’s always nice to receive that reward for all your time put in after a long hard week at work. But how much of your check is actually left after paying bills? Will it even be enough to cover expenses? Plus, you’ll need to set a little aside for living costs (like food and gas) to last you throughout the week.
…but it’s okay, you’ll get another check in 1-2 weeks… right?
Then the unthinkable happens – you lose your job.
Did you know about 62% of working Americans rely on their next paycheck to cover their basic living expenses? Even many of the high-earners are still living paycheck to paycheck. But why? From lower-class to even some of the upper working class – it’s all the same reason. Debt obligations.
Stop wondering where your next paycheck is going to come from, or if it will even be enough to cover your expenses. I put together a list of four things you can do right now to stop living paycheck to paycheck no matter how much money you make.
1. Live Within Your Means
This is the first and most important step. Living within your means simply means figuring out a (realistic) financial plan to cover your basic needs and other financial obligations – whether debts or goals, and sticking with it. You should have enough money to cover all expenses, with a little left over. If you still find yourself coming up short, see where you can cut back, perhaps on some nonessential things. You could also try to increase your income if possible.
2. Pay off debt
Debt is almost the sole reason that you would be living paycheck to paycheck anyway. Your debt is any money that you have borrowed – from your mortgage to credit card balances that you still owe. If someone was to give you $1000 right now, what would you do with it? If you have debt, then it should be used to pay a debt. After all, this is why you are relying on your next paycheck every week, right? If you had no bills at all, would you still stress about missing a payday so much?
Debt is the opposite of freedom, and the more you have, the further from freedom you become. You could be freeing up a lot of extra income each month if you had no debt obligations to pay, not to mention the money you would be saving in monthly interest.
3. Save money
Once you pay off your debt (at least the credit cards), you can should start saving. At first, it might seem hard – after all, you have all this extra money now, why not spend it? You only live once, right?
Resist the urge.
Why? Because once you have build up a savings, guess what? You now have money for expenses if something unforeseeable was to happen. The more you save, the easier it is to fork out money for something unexpected without feeling the sting financially. Work and save hard now, so that someday you won’t have to worry about it, and you can actually enjoy yourself.
4. Build Wealth
This step is optional; and more or less a continuation of the previous step. But, if you truly want to be financially secure (or at least financially stable), guess what? You now have a savings to work with. Although I do not advise blowing all your hard earned money, this is a great time to try something new or something you’ve always wanted to. You have your own cash as a buffer now – so whether you’ve always wanted to try starting a business, going back to school, pursue your dream career, or perhaps even try investing – you have some money to work with and even a little to fall back on in a worse case scenario (although try not to let it come to that). Just remember how long and hard it was to make that money – so be wise with it whatever you decide to do.
”The desire of gold is not for gold. It is for the means of freedom and benefit.”
~Ralph Waldo Emerson~
We all have a different financial story, but most of us would at least like to be financially secure. But that doesn’t mean we all have to be millionaires, either. Most of us would be financially content if we just simply learn to live within our means, had no debt, and stop living paycheck to paycheck.
Following these four basic steps cannot guarantee your financial success; you will have to work hard and put in the effort. It will take time to build a savings and pay off debt, but if you truly want to stop living paycheck to paycheck, this is a simple method anyone can follow – right now to help you live a more financially stable life.