The Young Money Club

According to a 2017 report roughly 4 out of 5 americans live paycheck to paycheck. I’ve been there at times and it can be very stressful counting down the days to payday. If you find yourself there more often than you’d like, there are a few steps you can take to get ahead of those upcoming bills. In this post I will show you exactly how to stop living paycheck to paycheck by reorganizing your finances and your priorities.

Get On A Budget

Getting on a strict budget is vital to anyone looking to take control of their finances. If you don’t know exactly where your money comes from and where it goes, you’ll have no chance at making the adjustments you need to.

For a basic guide on starting a budget you can check out my post here.

If you’re living paycheck to paycheck, that essentially means that when you subtract all your expenses from your income, you end up with $0 or even a negative. To escape the pit you need to create a positive imbalance where your income exceeds your expenses.

The best way to do this is by decreasing your expenses. It’s typically an easier and faster way to see results as opposed to trying to increase your earnings. The following are a few ways to help create that imbalance.

I have a $2 printable available if you’re looking for a premade template, you can check that out here.

Focus On The Necessities

If you’re living paycheck to paycheck, the first thing you need to do after making a budget is focus on your necessities. What exactly do you need to pay for? These typically include:

• Food
• Utilities
• Housing
• Transportation

These are what gets paid first, if there’s any money left over after you take care of these items, make a list of what else you need to pay and pay them in order of importance. The most important thing is that you, your family, and/or significant other are fed and have a place to live.

You may have other items that fall under “necessities” such as medical care, child care, etc. which should be viewed the same as those listed above.

Cut Out Luxuries

“Luxuries” don’t just include vacations and trips to the spa, they could be little things you hardly think about each day. This goes hand in hand with the previous section. While those expenses may be necessary they not need to be extravagant.

Food

For example, just because food is a necessity doesn’t mean you need to be eating out everyday, or buying your groceries from whole foods. Hit up your local Walmart buy yourself some groceries and start making your own food. It’s cheaper and typically healthier than what you might get from a restaurant.

Transportation

For transportation you shouldn’t be leasing a brand new BMW, a reliable used car that gets you from point A to point B is all you really need.

Carpooling is another great option if you live nearby a friend or coworker. If you live in a city you may not even need a car, a nice bike or skateboard will be a lot cheaper and perhaps more efficient.

If you absolutely need a car, be mindful of how much gas you use. Cut out unnecessary trips and maybe ask a friend or family member for their Sam’s/Costco card if you need to fill up.

Housing

When it comes to housing a lot of people don’t feel like going through the trouble of moving just to save an extra $100 each month, but depending on your situation this could be a great option.

You don’t need to live in that downtown apartment that costs $2500 a month when you could move 15 minutes away in a similar apartment for $1000 a month. If that sounds like you, be rational and spend your new savings on that little bit of extra gas to get you to wherever you need to go.

If you live alone but have some extra space, consider getting some roommates. They can help cover the cost of housing and may even split some of your grocery costs if you’re lucky.

Utilities shouldn’t be considered a “luxury” but some people go a little overboard. You don’t need your house to be 60 degrees all summer long, or 75 in the winter. Keep it reasonable and raise/lower the temperature when you aren’t going to be home.

If you like to take long showers maybe start trying to speed them along. Or if your shower takes second to warm up, stand by it so you know exactly when it’s warm enough to hop in, no need to let it run for 10 minutes before getting in.

For more ideas on how to save on these necessities check out my post Best Eco-Friendly Items That Can Save You Money

Others

Additional luxuries you may be able to cut could be things like subscriptions. If you get a box of makeup or clothes every month because it’s a “good deal”, that’s something you can live without.

Same goes for cable TV, if you only watch real TV a few times per month, cut the cord and stick to your Netflix account since it’s cheaper.

If you want more tips to save money I have a post on How To Save Money In College, and while it’s specifically targeted towards college students, the tips apply to everyone.

Reduce Big Expenses

When it comes to saving money, it’s best to start with the bigger items. While saving $1/day by making your coffee instead of grabbing Starbucks can definitely help, your better off focusing your energy on your bigger expenses.

For example, if you have a mortgage, right now would be a perfect time to refinance your loan and get a better interest rate. Interest rates are extremely low and even a 1% decrease over the life of your loan could add up to thousands of dollars saved.

Another option is to negotiate your rent, a lot of people don’t even know this is possible and end up just paying whatever is asked. There are plenty of methods to get a better deal some of which you can check out here.

Any debt you have over 5-6% should either be refinanced or paid off as quickly as possible. I’ll talk a little bit about that in the next section. High interest debt can kill you in the long term.

These tend to be the “big” items on most people budget but your personal items may differ. Be sure to use your own budget to see what you should specifically prioritize.

Pay Off Debt

If you have hundreds or thousands in credit card, medical, student loans or other debt you should focus on paying it off with every extra dollar you get.

It’s almost impossible to get ahead if you’re stuck paying hundreds of dollars in interest payments each month. Don’t be fooled by companies changing the name like “buy now, pay later”. If you’re getting something for free or less now, you’ll be paying for it and then some later on down the line.

If you don’t know where to start Dave Ramsey’s Debt Snowball Method is a great, simple way to get rid of your debt quickly. It’s a proven method that has helped thousands dig their way out of debt and start living a more prosperous life because of it.

Increase Your Earnings

My last recommendation, because of the added stress and effort that goes into it, would be to try and increase your earnings. Depending on your current circumstances this may not be that difficult, but for others it could be close to impossible.

Increasing your earnings doesn’t necessarily require you to start a new business or try to become an e-commerce giant, it could be much simpler.

The easiest way would be to sign up for uber, postmates, etc and spend a few hours a week driving for one of those services. It’s easy, doesn’t require strict hours, and will allow you to earn some extra cash in your free time.

If you have a ton of free time, you could just pick up a second part-time or weekend job. They may not be glamorous but there are plenty of opportunities for package handlers, server, and remote data-entry jobs.

The last option would be to attempt to ask for a raise at your current job. This one could be hit or miss depending on your current work situation.

Things like, do you deserve a raise? When’s the last time you got one? and are raises common in your position? should all be taken into account before making your request.

Be ready with your explanation for why you think you deserve a raise beyond just, “because I really need the money” or, “because I’ve worked here for X amount of time.” (For tips on how to ask for a raise check out this article.)

Conclusion

If you follow these tips on how to stop living paycheck to paycheck, I guarantee you’ll see a significant improvement in your financial life. There’s no need to stay stuck in that stressful cycle when freedom is only a few easy actions away. Best of luck and comment below with any questions you might have.

If you would like to learn more about ways to save or earn, check out some of my other posts:

HOW TO SAVE MONEY: 10 SIMPLE TIPS

15 BEST SIDE HUSTLE IDEAS YOU CAN START RIGHT NOW

HOW TO MAKE MONEY DURING THE CORONAVIRUS