One of the scariest financial situations to be in is living paycheck to paycheck. Unfortunately, too many people are in this predicament. According to CNN, 76% of Americans live from paycheck to paycheck. What’s even more surprising is that a third of Americans who earn more than $75,000 live this way as well. It’s a difficult situation to be in, especially when you have a family to support, and it can be mighty tough to get out of this rut.
Having savings to fall back on in case of emergency is important to everyone, which is why living paycheck to paycheck can be so dangerous. Any unexpected expenses can really complicate your life and create long term problems that make it more and more difficult for you to dig out of this hole. If you’re living paycheck to paycheck, consider these 5 tips to help you get on the right course:
Change Your Lifestyle
The first thing you need to do is to change your lifestyle, which is more of a mental change than anything. Being financially healthy is more than just skipping a couple trips to the mall or brown bagging your lunch. It’s a commitment to changing your habits and improving your life. You not only need to understand your long term goals, but you also have to want it as well. It’s going to be a long road ahead and if you’re not taking it very seriously, you won’t get very far.
Reduce Discretionary Spending
When you’re living paycheck to paycheck, you should drastically cut down on the luxuries. It’s OK to treat yourself every once awhile but not too often. Unfortunately, most of the discretionary spending will have to wait until you can get your finances back on track. That means only spending on things you need until your situation improves. You’ll have to cut back on your lifestyle significantly and your social life will take a hit, but you’re going to have to make sacrifices if you want to get out of this rut.
Earn More Money
You may have already cut back on expenses but still find yourself with nothing left over after every paycheck. In this case, your best bet is to find ways to earn more money. There are many simple ways to make extra cash, such as babysitting, dog walking, or running errands. If you have a skill that is in demand, you can put it into use, such as writing, graphic design, or coding. Many small-business owners started their companies as side jobs just to make extra money and honed their skills over time.
Stick to a Strict Budget
Make sure you have a strict budget and you stick to it. You might not need to track every little penny, but you need to know exactly where your money is going and whether you need to adjust if you’re living paycheck to paycheck. Track your expenses carefully and analyze your habits to see if there are ways you can cut back at the end of every month.
Have you ever lived paycheck to paycheck? If so, how did you change your financial habits?
This article originally appeared on MoneyNing.com. Let us know what you think (or read what others thought) here.
