5 Ways to Stop Living Paycheck to Paycheck

5 Instances When Frugality Costs You More
April 15, 2015
Three common misconceptions about money
May 7, 2015
Show all

5 Ways to Stop Living Paycheck to Paycheck

Are you living paycheck to paycheck?

Do you find it difficult to save money no matter how hard you try?

Do you constantly feel stressed about your bills?

If so, you’re not alone.

Millions of people live from one check to the next with little to no savings in their bank accounts. They haven’t made any preparations to help them deal with an emergency.

Fortunately, if you’re in this situation, you can change it. Here are five ways to break the cycle of living paycheck to paycheck:

1. Monitor Your Spending

If you want to optimize how you spend money, you need to start tracking how much comes in and goes out every month.

Look back over the past three months’ worth of bank and credit card statements. Check all your financial records.

If you spend most of your money as cash rather than credit or debit, note every transaction you make. This will allow you to understand where your money is going.

2. Build a Budget

Now that you know approximately how much you spend and what your money is going towards, it’s time for you to set some goals.

The word “budget” has a negative connotation to it, so don’t think of this as a budget. Think of it as a challenge to accomplish a particular goal.

For example, you might set a goal of reducing the amount of money you spend on food by 10%. You may set a goal of dining out at restaurants less often. You may want to reduce the amount of money you spend on fuel by biking, walking, or using public transportation.

Create goals that are realistic. Lowering your spending by 5% to 10% in a few key categories is a realistic goal. Dropping your expenses by 50% on a necessity like groceries might not be feasible (at least not right away).

3. Look for Cheaper Housing

Lowering your cost of housing is one of the best ways to cut your expenses since housing is likely your largest bill.

How can you save? Be willing to accept a smaller space or a less updated, older space in exchange for a reduction in rent.

If you own a home, this step gets a little more complicated.

You may want to get serious and ask yourself whether or not you can reasonably afford to keep your home. You might be able to improve your life, live within your means, and reduce your financial stress by scaling down.

4. Build a Rainy Day Fund

Now that you’ve developed a budget and reduced some of your expenses, you should have some money left over.

Start putting this money into a rainy day fund. This is a cushion you shouldn’t touch unless you need to take care of an emergency. A leaking roof, major car repair, or unexpected health bill constitute an emergency.

Although this is a long-term goal, you should eventually build a rainy day fund that holds between three to six months’ worth of your expenses. This will give you money to fall back on in case you lose your job.

5. Look for Secondary Sources of Income

Your primary job shouldn’t be your sole money making activity.

Whenever you’re off work, look for other ways to boost your income. Take on a second job or start a small side business you can run from your computer at home.

You could sell items on eBay, for example, or write and edit articles within your field of expertise.

If you’re more of a hands on person, try some carpentry or construction work. Spend a few evenings answering telephones at the front desk of a beauty salon or office. Restaurants, retail shops and even bars and nightclubs are places where you can look for additional hours. These will all help boost your income.

COVID-19 ANNOUNCEMENT

MARCH 23RD 2020

At this time we are continuing business as usual however our team will now largely be working from home. This limits our phone contact availability. Customer support remains available Monday to Friday but please email in to info@oraclelegal.com with your query. We aim to get back to you within 48 hours. On receipt of PPI refunds our fees remain payable and can be paid via our website www.oraclelegal.co.uk/payments/ or via BACS. We are also working on some other areas of potential claim for you in connection with your PPI and will be in touch shortly where applicable to present this to you.

IMPORTANT:The last day we can accept a new claim is Friday 23rd August – midday – to ensure the paperwork is properly processed and lodged with your lender before the cut-off time.