Let’s face It. After global pandemic, most of us living paycheck to paycheck. Although we saved a bit from commuting, lunch out expenses, still overall situation didn’t improve.
According to CNBC, 63% of Americans have been living paycheck to paycheck due to the pandemic.
In fact, 28 percent US adults don’t’ have any emergency savings (as per bankrate’s latest financial security index).
In Australia, the situation is very grim. 13.4 million Australians don’t have any alternative if they lose their job next day. Relying on government benefits would be inevitable for 37% of Australians.
The term ‘living paycheck to paycheck’ is familiar to all of us. A lot of us spend the entire salary to meet the daily necessities. And then we must wait for the next pay cycle to spend again.
In most cases, these people spend their earnings without thinking it thoroughly.
It shouldn’t be going on like this. Today, I will share few points which will make you to think to stop living paycheck to paycheck.
Why Should You Stop This?
If you are one of them, I’m sure you want to get out of this endless cycle. Because it makes your life miserable, right?
I have gone through the same situation. Its painful. When I needed to find few extra dollars to buy some medicines, there were no money in my wallet. I discovered few surprising ways to avoid this vicious cycle.
If you are determined, it’s not that hard to plan and work accordingly to secure a financially stable life.
If you wait for next pay cycle to buy things, chances are, you will borrow money. You will sink into debt more and more.
Most likely, you will use your credit card. Gradually, your credit card will increase.
So, it’s better to take steps now to get into debt and stop living paycheck to paycheck.
Let me share with you seven actionable steps that you can apply now.
1.Budgeting is Necessary
Almost 55% Americans maintain a budget on a regular basis (within less than 5 years). Making a budget to get a firm grip of your financial situation is the most important thing to me.
A budget lets you enjoy your money through the whole month. It gives you the flexibility to cover an emergency expense. If you spend your whole paycheck the first day, you’ll have to take loans to survive the rest of the month. That adds an extra burden on your shoulder.
For making a budget you’ll have to track your spending. Make a list of your fixed payments that you’ll have to pay right away. Also find out your total monthly income. It’s not that hard. Though it might feel overwhelming, you can take help from apps such as PocketGuard, Mint, YNAB etc.
2. Achieve Mastery over Saving
Save First, Then Spend
You might have heard this before. Because saving before spending your money is one of the easiest ways of saving. It helps you have a fixed amount saved up every month. For this here are two ways:
- Build an Emergency Fund:
According to CNBC survey,almost two-thirds of Americans don’t have an emergency fund.
And, if you spend your salary before the next one, certainly you wouldn’t have an emergency fund.
Because all your money will disappear before you get the chance to save.
So, after getting your salary, save at least 10% of it and then spend the rest accordingly.
According to the data of U.S. BUREAU OF LABOR STATISTICS, an average household spends approximately $3,500 per month.
And after the pandemic, Author of ‘I will Teach you to be Rich’, Ramit Sethi suggested for a one-year emergency fund rather than six-months.
So, an average household should have a $42,000 emergency fund for a safer financial life.
- Savings and Bill Payments Automation:
From my banking experience, I can tell you that Some people are not interested in saving or have a habit of spending the money the moment they receive it.
For those, automated savings can be the best solution. It means, whenever money is transferred to your bank account, a fixed amount is transferred to your savings account. Easy!
The same goes for your bill payments. Your bills can be deducted from your account when you receive your paycheck every month.
To Set up an automatic saving, you can go to your internet banking and create this auto debit from your salary account to Savings Account.
You don’t have to worry, leave it to the automation.
3. Boost-up Your Earnings
Starting a side hustle can be a great idea for you to boost your income and make the financial worries go away. It includes anything by which you can earn extra money outside your job.
a. Start a Blog
If you have knowledge about certain popular topic, just start a profitable blog today.
As blogging interests a lot of people, it can be an effective way to earn money for you. People who are good with words and are willing to put their creative thoughts in front of the world, can make money out of blogging.
If you love writing, like connecting with people and helping them out, it can be one of the best ways.
It takes time and needs hard work to be a successful blogger. All you must do is be determined and give it a go.
Otherwise, you won’t know whether it works for you or not. There are plenty of examples of millionaire bloggers.
You can read Why and How to start a Blog in 2021 to make Passive income
b. Online Consulting
If you love talking to people and solve their painful problems, you can think of becoming a consultant.
The job of a consultant is to solve problems of other people by giving them the proper advice. It also requires good interpersonal skills.
A consultant must be an expert in a particular field to give professional advice. They can be giving advice to both individuals and businesses.
- For starters, you’ll have to identify your area of expertise. You might be thinking what problem you could help people solve? Think about what do people ask you to help them with frequently?
- Then choose the target market. Who are the people you want to help with your advice and assistance?
And if you think you could be better by learning it, take a course. When you are confident enough with your experience and knowledge, you will certainly make money.
Check this blog too and see how they are killing it Sam Ovens’ Consulting Accelerator detailed review in 2021
- Social Media Management
Do you spend hours scrolling social media feed or love checking your notifications?
Chances are that you might be a good fit to be a social media manager for a business.
Communication, writing, creativity, and data analysis are the skills that you need to be a social media manager.
You have to perform a number of diverse responsibilities; marketing skills are also necessary. If you like doing something challenging and have a knack for social media, you should give it a try.
According to this article of Statista (the German database company), the number of US online shoppers is expected to increase by 2021.
In 2016, 209.6 million people at least once bought products online. And this number is projected to reach 230.5 million by 2021.
So, the demand for social media managers is expected to increase due to the growth of online shoppers.
- Proofreading
Do you have a good eye for details? Chances are you could utilize that skill to become a proofreader.
If you like writing and reading, proofreading can be an exciting thing for you.
Personally, I enjoy it.
You can even learn how to do and what to do through different courses. The job of a proofreader is to polish a written content.
All the written contents of a blogger or website owner needs a final touch and proofreading that is.
As this job pays well, you can give it a try.
Caitlin Pyle started proofreading as a full-time job on Dec 2009. In 2015, she started Proofread Anywhere to help people know how she did it, and by it, she has earned more than ever.
And according to her website, she became a multimillionaire within four years.
So, what are you waiting for?
- Online Translator
According to the statistics provided by U.S Bureau of Labor Statistics, by 2026 the employment opportunities for translators and interpreters will be increased 20% nationally.
Because there is a growing demand for translators and sign language interpreters.
For working as a translator, you’ll have to be fluent in a foreign language. The people who have a knack for learning different languages, it can be a great opportunity for them.
Freelancer, UpWork are the platforms to find these jobs. Your salary depends on your skillset and hard work.
- Work as a Virtual Assistant
A virtual assistant a person who helps a business owner from a remote place. These assistants get hired on a freelance basis because they are experts in what they do.
Working as a virtual assistant can be beneficial because of these two reasons- (1) you can manage the schedule because you can work according to your schedule, (2) you get to work from anywhere.
There are many works that can be done by a VA. Starting from graphics designing to responding to emails, VAs can offer a lot of services. It also includes social media management, writing, bookkeeping etc.
4. Cutting-off Expenses are Not Enough
By putting my hand on my chest, I can tell you that I didn’t use everything whatever I bought in 2020. My wife thrown out some of the items which took our spaces unnecessarily. For example, I bought indoor sliding for my kid. He never used it. So throwing out was an inevitable option.
The trick is before buying, I should have thought if that item will be necessary for us. I was victim of impulse shopping.
All of us buy things that we never use. So, refrain yourself from spending money on unnecessary things. And when you do that, make sure you save that extra money.
Suppose you have a gym membership that you’re currently not using. Or you have multiple monthly app subscriptions like Hulu, Netflix, HBO NOW, etc. that you don’t need all at the same time.
If you could find an extra $150 a month by cutting down these types of unwanted expenses, after a year you’d have an extra $1,800 in your savings account. So, only cutting off expenses are not enough. You’ll have to ensure that you are saving that extra amount.
5. Live Below Your Means
If you are the one who doesn’t have an emergency fund, has piled up debts here and there, spending money on unplanned trips, you are obviously living above your means. It’s not a problem until you face a financial crisis or start living up to your next paycheck.
Living below your means doesn’t necessarily mean you have to cut out all the expenses out of your life. It means spending less than you earn. Utilizing the money, you have in a disciplined or planned way is the key here. And this habit of spending less allows you to save, invest and grow your money.
Follow your budget and keep track of you every penny you spend. It helps you understand where you need to focus more to spend less.
Next time when you feel tempted to buy an expensive clothe, just think, is there any cheaper alternative?
6. Leave Your Credit Card Alone
If you are currently in debt, get out of that as soon as possible. Your debts might be the biggest reason behind your living at this moment. Also lessen the usage of credit card gradually. And as published in Experian, credit card balances went down by 9% in the past year.
Despite the COVID-19 situation, consumer credit card debt came down from $829 billion to $756 billion.
Credit cards are the source of those piled up debts. So, it’s better to get rid of it for a better future. When you don’t have a credit card with you to pay, you might end up not buying the unnecessary things you picked up at the store.
And you won’t be increasing your debt.
See, it has benefits!
So, don’t even hesitate to cut it or freeze it for good.
I personally don’t use my credit card. I locked it away. I don’t let it slide in my wallet.
7. Make a Financial Plan for Future
A financial plan created on your own or with the help of a professor, is the roadmap of your finances. It gives you a picture of your current financial condition and future strategies.
And it includes details about your cash flow, savings, investments, debt, insurance etc. Through planning ahead, your income can be managed efficiently.
- First things first, set your goal, where you want to see yourself in next 5 years financially.
- Monitor your spending patterns and track your expenses.
- Don’t forget to invest your savings. Because that’s the easiest way to increase your earnings.
- And last but not the least, have the proper insurance coverage. There’s no other way of being protected financially other than insurance. Mainly, insurance is your back-up plan that will protect your assets in case of accidents that require a large amount of money to be resolved.
Final Thoughts
For ensuring a safe and secure financial life ahead, it’s necessary to get out of living paycheck to paycheck.
To save more for your retirement or achieve your financial freedom, you must start saving now.
You must think twice before you buy expensive unnecessary products or take loan from banks to buy the daily necessities.
You can overcome this, act now!
Making a budget, saving money for a better future, reducing your debts are the easiest steps.
You might feel overwhelmed by looking at your expenses.
Don’t be stressed.
Track your expenses, find out the ones that are useless. Take a moment and then work on your financial plan.
A structured plan can help you get a firm grip on your finances. And most importantly, maintain your emergency fund.
Lastly, don’t forget to save your money. The expenses you cut-off, put that money in your savings account.
Slowly you will build up emergency fund and break the cycle of living paycheck to paycheck.
Come on, I believe in you. You can do it.
