Stopping the never ending cycle of living paycheck to paycheck is something that can be done within months. As you are inundated with monthly bills that you can’t meet, and borrow to pay for essentials, while postponing payment on others, we examine how you can get out of the situation. Below, we have also outlined the many ideas that we have successfully put into practice to ensure we are not one paycheck away from financial ruin.
Create Goals for Every Month
Planning is an important first step in the path towards saving more every month and getting out of the process of living paycheck to paycheck. A plan can be complicated or simple, but at the very least it should include a goal of saving a specific amount per month, which can be anywhere between a few dollars to several hundred dollars. Accomplishing a saving goal every month, allows you build up an emergency fund which you can utilize if you are unemployed for a short period or switching between jobs.
Setup a Budget for Major Expenses
All of us have major expenses per month, whether it is rent for accommodation or the grocery bill for a family. These major expenses however need to be controlled if you want to start saving every month. Making a budget therefore, is important and if you don’t already have one it is time to start.
With a budget you can ensure that you don’t splurge on a restaurant trip, have enough to buy required groceries and eat healthy balanced meals. A budget can be something simple as putting an amount of money in a number of envelopes or using a digital tool such as app which can help keep an account of what you are spending. Apps such as Mint can track even the spending that you run up using credit/debit cards allowing you remain within budget every month and save a portion of your paycheck.
Check Spending on Specific Items and Make Reductions
Paying too much for rent per month, or insurance for your car or your health can be draining your money. So take into account these items and others which often result in people paying out additional sums per month without being aware of it. By checking if you qualify for health insurance or car insurance at a lower premium you can save money per month from your paycheck. With more websites and apps available to check the various car and health insurance providers available you can easily find a lower cost option within minutes. The website that offer the best comparison services often have details from several hundred plans and so you are guaranteed the best deal on premium rates.
Automate your Savings per Month
Even if you have only a small amount of money to save per month automating savings with the aid of apps which withdraw money into a separate account is recommended. Automated savings ensures that money goes into an emergency fund or another account which provides more interest per month.
Save Using an Account That Provides Higher Interest Rates
Some savings and checking accounts provide higher interest rates than others and often these do not have hidden fees that you have to pay per month. Additionally banks that only have an online presence have lesser fees compared to other conventional banks. Maintaining savings accounts in such banks allows your money to earn more in terms of interest without you having to do anything extra.
Pay off Loans and Debts
Existing loans and debts on credit cards, often result in people paying hefty interest per month which otherwise can go towards savings. So when you make your plan to stop living based on your paycheck, you need to pay off loans. Additionally credit card debt can consume a substantial amount of your paycheck with sometimes up to 20 percent interest being charged. To pay off debt, you can adopt several measures such as consolidating debt with the help of a large loan. A large loan with a lower interest rate will help your pay off multiple credit cards and increase your savings per month.
Taking online surveys and using tools which provide payouts when you make purchases allows you to earn money even when you are buying items that are part of a sale. With people coming up with innovative ways to save, you will always find something new to help you get out of the pattern of living from one paycheck to the next, and consequently reduce some of the stress in our life.