Living paycheck-to-paycheck can be very draining and affect everyone in your household. While you may be paying your bills on time and covering all your monthly costs, one unexpected expense can cause the house of cards to come crashing down. Sure, you could try to get a second job or start a side hustle, but in reality, it’s not that easy – especially if you’re raising children.
Breaking free from this financial cycle can often feel impossible. But there are moves you can make to begin building your savings and eliminate the stress of the paycheck-to-paycheck lifestyle. Here are eight tactics to explore that can help you get a hold of your finances.
1. Know Where Your Money Goes
Tracking your expenses is a crucial first step in breaking free from this cycle. Without knowing where your money goes, finding ways to build your savings can become extremely challenging.
If you prefer to use cash, it may be difficult to track your expenses accurately. Instead, use your debit card so that all transactions will be listed on your monthly account statement. Then use your statement to create a budget and find areas you can cut back.
2. Prioritize Your Spending
Organize your monthly expenses into two categories: Urgent and Non-Urgent. Urgent expenses include bills you must pay each month, such as loan payments, groceries, gas, savings, and insurance. Get in the habit of paying yourself first – putting money aside in your savings account. You can then use any leftover money for Non-Urgent expenses like new clothes, entertainment, or dining out.
3. Stay Away from Credit Cards
While credit cards are great financial tools, the interest charges can set you back further if the balance isn’t repaid that month. If you want to get ahead on your finances, it’s wise to only use your credit cards in emergencies. Instead, work to structure your monthly expenses around your paycheck cycle and stick to using your debit card.
4. Start Saving
When living paycheck-to-paycheck, building your savings often seems impossible. The trick is to open a separate savings account that you cannot easily access. You want to be able to transfer money into this account but not withdraw it unless absolutely necessary.
Then, begin making small deposits into this account, as little as $5 a week. The goal is to build the habit of transferring money into this account regularly. If you struggle to remember to transfer money, set up an automatic transfer.
5. Plan Your Meals in Advance
If you and your family are constantly on the go, eating out is likely a common occurrence in your household. It can also drain your finances, especially as prices continue to climb. Instead, work to plan your meals for the week in advance, then buy food in bulk. Spend one day cooking and dividing up the meals into daily portions.
6. Review All Recurring Bills
Take time to review all your recurring monthly bills and look for areas you may be able to cut back. Be sure to contact your internet provider, phone carrier, TV subscription services, and insurance companies and ask for help reducing your bill. Most companies will work with their customers to find cheaper options.
7. Refinance Your Current Loans
Loan payments, such as your mortgage, auto loan, or credit cards, tend to make up most of your monthly expenses. You could easily save money each month by refinancing your loans to a lower interest rate or by extending your term. If you have multiple high-interest credit cards, consider a debt consolidation loan.
8. Treat Yourself
Cutting back on your spending will help you break free from the paycheck-to-paycheck cycle. Still, it’s also important to treat yourself occasionally. Like a cheat meal when on a strict diet, treating yourself now and again can help satisfy spending temptations, alleviate stress, and get you focused again on the long-term goal.
We’re Here to Help!
If you’re interested in learning more about budgeting or would like to review products, such as savings accounts, debit cards, or debt consolidation, we’re ready to help. Please stop by any of our convenient branch locations to speak with a team member today.
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