Whether you have one child or several, raising a family is expensive. It seems, at every turn, there’s another expense consuming your money. As a result, many families find themselves trapped in the vicious cycle of living paycheck to paycheck.
This can cause enormous amounts of stress and put a strain on even the best relationships. Thankfully, you can slowly work back to paying your bills at the start of each month and enjoy life. Here are seven ways to end paycheck to paycheck lifestyle.
1. Facing Reality
There are two reasons people end up living from paycheck to paycheck. The first is something that has a significant financial impact on your life such as the loss of a job, an illness, or a new addition to your family. The second reason is the mismanagement of money. Identifying which category you fall under will allow you to move forward.
2. Budgeting
No household ever gets ahead of their finances and achieves a comfortable lifestyle without a budget. While it may seem that it’s just a piece of paper with a bunch of numbers, those figures represent your finances.
When you make a comprehensive list or use a worksheet to map out your household bills, loans, credit cards, and factor in other monthly expenses, you get a good sense of where your money goes.
3. Bundling Services
There are many ways to reduce your monthly expenses. Concerning your utilities, turning off the lights when you leave a room and running appliances such as the dishwasher and washer/dryer at night are just a few ways to reduce your energy costs.
You can also bundle services like your cable, internet and home phone, and your insurances. Even if you have SR22 insurance, not all companies charge the same rates, so make sure to shop around to find the cheapest SR22 insurance.
4. Reeling in Your Debt
Debt elimination is one of the most effective ways to end the paycheck to paycheck lifestyle. Debt is something that often goes unnoticed until it starts to accumulate. It’s not until you have trouble making all of your monthly payments you realize how badly you’re now in over your head.
You have a home mortgage, an auto loan, a few credit cards, and a personal loan. The good news is, you can start the process of reducing your debt. If you have equity in your home, refinance the loan at a lower interest rate.
Also, for your credit cards, focus your efforts on applying more than the minimum due to the balance of one with the highest interest rate.
5. Establishing a Savings
When you live paycheck to paycheck, the furthest thing from your mind is probably opening a savings account. However, putting money away will help to keep your credit in good standing, help you afford a vacation, and give you the ability to pay for an emergency repair.
You can start out with just setting aside a small amount of each paycheck, and then, as your debt levels off and (eventually) starts to get smaller, you can increase the amount you save every month.
6. Learn Respect for Money
Money is essential to maintaining a good quality of life. However, many people don’t respect their money. They rack up thousands of dollars in credit card debt on impulse purchases without giving any thought to how they will pay for it.
Instead, start a new practice of using cash for purchases to end the paycheck to paycheck lifestyle. This way, if you want something expensive, you’ll have to save up for it. Chances are, by the time you have the money, you either won’t want it anymore, or you’ll have more appreciation for owning it.
7. Curb Your Daily Spending
Going to work can end up costing you $50.00 and upward each week just on the morning stop for coffee and your lunch costs. If you add that up for a month, you’re talking about hundreds of dollars. Instead, try brown-bagging your lunch and purchasing a thermos so you can bring your own coffee to work.
Living paycheck to paycheck can put a terrible strain on your relationship. Luckily, there are plenty of ways to reduce your overhead and start enjoying life.
