Living paycheck to paycheck seems to be a common lifestyle, but that doesn’t mean everyone is doing it willingly. It can be really difficult to know how to break the cycle and enjoy a comfortable financial surplus. In fact, there are so many benefits to learning how to do this.
About 61% of Americans are living paycheck to paycheck. Are they happy with this situation? Or would they change anything if they could? The answers to these questions are obvious.
Having extra cash by the end of each month might be great. Check out these practical tips for how to stop living paycheck to paycheck. Who knows, you can start living better already tomorrow?
1. Budget by Paycheck with a Paycheck Breakdown Budget
When it comes to personal finances, proper budgeting is a key to success. Monthly budgets are some of the most reasonable budgets to build. But unless you get paid once a month, this strategy might be slightly difficult to implement. Depending on whether you get paid once or twice a month, you will have a different budget plan in the end.
2. Use Percentages
Your spending and income should be measured in percentages, which provide a more tangible overview of where your money https://www.instantcashtime.com/need-money-now/ is going paycheck to paycheck. This can also help you estimate whether you are an average spender or an active spender. Then, you will decide how much you need for renting a flat (on average 25% – 35%), paying utilities (on average 5% – 10%), and covering insurance fees (on average 10% – 20%).
3. Pay Yourself First
Once payday hits, you can take straightforward, well-planned, and calculated financial action. Before you go any further, you should pay yourself first. This means that you should put money in your savings account as soon as possible. This could be $5, $100, or even more.
4. Open a Savings Account
Part of learning needs you to open a savings account to keep money safely stored. This savings account can start growing similar to your emergency funds, retirement planning, and so on. Make some fun savings goals to help you feel enough encouragement to save money and put extra cash aside if possible.
5. Stay Away from High-Interest Rates and Credit Card Debt
Sometimes, you have any other choice but to borrow money for the things like higher education, home or car purchase, and so on. It can be a reasonable solution as long as you stay away from high-interest rates. The latter can ruin your financial situation badly. Eventually, you can find yourself spending all your money on loan repayment along with skyrocketed interest rates.
6. Use Automatic Payments to Avoid Late Fees
We all have bills to pay regularly, but people who pay their bills with autopay don’t have to suffer from late fees and other penalties. Setting up automatic payments for your bills has a great potential as a great way to benefit from digitalization. Feel free to set up autoplay for such things as rent, utilities, insurance, car payments, credit card payments, and so on.
7. Meal Plan Instead of Eating Out
You should keep your finances limited. Spending too much money on food doesn’t make any sense. Eating out as well as shopping for food can get expensive pretty fast. Fortunately, there are plenty of cheap and easy recipes to use at home instead!
8. Set More Financial Goals
Instead of letting finances take control over you, you should take them under control yourself. Whatever your current financial situation might be, you should make financial goals that encourage you to break the paycheck-to-paycheck cycle.
Take extra effort to manage your financial situation properly. To make this possible, you need to sit down and set your goals. If you do it right, you will be able to track your success while reaching goals one by one.
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