Financially Resilient – How to Stop Living From Paycheck to Paycheck

Financial problems have struck almost everybody at one point in their lives. Whether it’s a sudden, unexpected expense, a layoff or just working a job that barely covers your expenses, financial problems can lead to high levels of stress and anxiety.

One of the biggest financial concerns many people face is that of “living paycheck to paycheck.” Stretching yourself so thin that you hardly have any money left over each pay period is a dangerous financial game to play. But it doesn’t have to be a game that you play.

How to Stop Living From Paycheck to Paycheck

There are some tried-and-true ways you can stop living paycheck to paycheck and get your financial future in order.

Set Financial Goals

There is really nothing you can do to secure your financial future unless you actually know what you want that future to be. You can’t just say, “I want money in the bank and a house,” because it’s very hard to judge how close you are to achieving that goal. Instead, you need to set specific, measurable goals that are like mile markers along your journey to financial freedom.

Think of all of the things you want to have in 10 or 20 years and write them down. Then, put them in order from most important to least important. This will give you a hierarchy that will show you exactly what you want out of life and it makes it real to you because you’ve written it down.

Next, do a little research and figure out how much money you will need to achieve each goal. Now you will know about how much money you will need for everything so you can start working on a way to achieve those goals.

Set a Budget

Having a budget is just good common-sense financial management. But, unfortunately, many people overlook this easy concept. If you set a budget, it will help you manage your money more efficiently so you won’t need to live paycheck to paycheck any longer.

Once you know how much money you will need to attain your financial goals, you will have an idea of how much you need to save each month. There are tons of different apps and programs you can use to track your spending and savings.

So, choose one and enter everything you spend for a month. This includes the coffees you buy every morning to the bills that you pay each month. The budget program will then give you an idea of where you need to cut back in order to save more.

After a few months of budgeting, you’ll get a clear picture of your overall financial health, which will help you make the right decisions moving forward.

Make Sound Financial Decisions

If you are living paycheck to paycheck, you can’t really afford to make any drastic mistakes when it comes to saving and spending your money. So you need to make smart decisions every time so you can avoid bigger problems in the future.

This means that you need to find ways to save any way you can. Choosing the right credit cards, such as ones that offer cash back or some type of points system where you earn rewards (such as upgradedpoints.com), is a great start.

This will eliminate all of the cards you shouldn’t be using and still allow you to pay for things you want or need. Also, avoid making any large purchases for as long as you can: a large purchase eats up a lot of your cash for a long time, so only make large purchases on things you need.

Pay Off Your Debts

If you look at your financial records, you’ll probably notice that outstanding debt is taking away most of your available cash, forcing you to live paycheck to paycheck. Getting rid of this debt will ease your financial burdens, making it easier for you to save for your goals.

There are several different philosophies for paying down debt, and you can decide for yourself which one to choose. Should you pay off the highest interest rate first? Or, the debt with the lowest balance? But one thing they all agree on is that you should never miss a payment. Missing payments affect your credit score and incur late penalties, which will take you in the wrong direction.

Whatever you choose to do, at least make the minimum payment for all of your debts each month. Then work on getting those debts cleared so you have a good financial outlook.

Living paycheck to paycheck is not necessary if you take the right financial actions as soon as possible.

Isabel O’Connor remained in a cycle of debt for years and years until finally she took control and became debt free late last year. She shares her story and her tips with others in a similar situation.