How to End the Paycheck-to-Paycheck Cycle

Living paycheck to paycheck is a never-ending cycle that is perpetuated by expenses and the lack of money to pay them.

Credit card debt, bills and unexpected expenses may make you wait anxiously for your next paycheck until you have funds again just to find yourself quickly without money again. Living paycheck to paycheck can be frustrating, and emotionally draining. Here are some ways to help you break the cycle.

Reevaluate (or create) Your Budget

In order to break the never-ending paycheck-to-paycheck cycle you may want to consider taking a look at your budget and seeing where you can cut expenses. Be realistic about what you can cut out, you may want to start small to avoid being discouraged. Include all of your expenses into your budget. This includes mortgage/rent, car payments, any loans or credit card bills you are paying off, utilities, groceries, medical expenses, leisure expenses, clothing, and everything else you spend money on per month. You may want to consider cutting items like chain bought coffee, memberships/subscriptions, clothing/luxury items and eating out as expendable during times like these. This doesn’t have to be permanent, only for now to help guide you to living within your means and not by each paycheck!

You may want to try bringing lunch to work every day, opening the windows during the summer, meal-prepping your dinners to avoid eating out and combining your errands to one day to help you save time and money – these suggestions may help you be one step closer to seeing more money in your bank and less stressed when you see your paycheck.

Spend Less Than You Earn

It is important to understand your income to expense ratio. If you are living paycheck-to-paycheck, then you may be spending more than you earn. You may want to consider “pretending” you earn less than you do. This will help give you a “budget surplus” and add a little boost to your cash flow. You shouldn’t be charging expenses on your credit card if you can’t pay them off in full every month.

Build an Emergency Fund

The last thing you think about when you live the paycheck-to-paycheck lifestyle is saving for an emergency fund – but it can be done! That little security blanket of a few bucks put away can ease your burden emotionally and financially. Use some of this money to pay down high interest debt too. If you are having problems with credit card debt, try using some of the cash you just freed up to pay a little bit extra than the minimum on your credit card bills! Every little bit can help and having little debt can also help you get through difficult and lean times.

Take a look at your paycheck when it comes in and try to put a small portion of your expenses into your emergency fund. If you don’t see the money, then you won’t spend it. The goal to build a perfect emergency fund is to add 10% of your paycheck into the fund each month. Start out small and work your way towards your goal!

Increase Your Income

An effective way to end the paycheck-to-paycheck cycle is to earn more when you can. You may want to consider looking into a side-hustle that can help boost your cash flow. You can get a second job, look into freelance options or even babysitting.  Bartending or serving on the weekends here and there will not only increase your income but also can double your paycheck!

It can be tough to break the paycheck-to-paycheck cycle, but it’s possible. It’s certainly not everyone’s favorite task to create a budget and watch how much you spend, but sticking to a more frugal lifestyle may help you get back on your feet and live a financially healthy lifestyle. Are you living paycheck by paycheck? Have you started to budget? Tell us how you broke the cycle and leave your comments below!

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