Does your salary seem to disappear just days after receiving it? Towards the end of the month, do you find yourself scrambling to gather change from the bottom of your bag to pay for things? Darling, you need to stop living paycheck to paycheck.
There's nothing wrong with enjoying the occasional movie, night out with friends, or even splurge on killer heels. But indiscriminate spending without preparing for the future is a recipe for disaster. And lots of debt.
So here's what you should do to pick yourself up, stop living paycheck to paycheck, and get your act together.
1. Don't make saving an afterthought
Ideally, you should be setting aside at least 20% of your salary in your savings.
Lots of people make the mistake of spending first, then saving what's left over later. But this doesn't work — if you don't set money aside, you're probably going to spend it.
What you can do is automate your savings. On your payday, set up automatic transfers to your savings account (yes, you should have a separate account for your savings). Or you could open a retirement fund and set up monthly automatic transfers to this fund.
Automating your savings makes it easier for you to keep within your limits, and gives you the peace of mind knowing that you have funds set aside for your future.
2. Track your spending
You're probably living paycheck to paycheck because you aren't paying attention to how you're spending money. One easy way to change that is to simply track your spending.
Sounds like a no-brainer, but how many of us actually do this? List down all your expenses and you'll find yourself being more careful about your money in no time.
You could list your expenses down in your phone's notes app, download a budgeting app, or in a budget spreadsheet. Try different things and see what works best for you.
3. Ask yourself: "Can I really afford my current lifestyle?"
Maybe you're living paycheck-to-paycheck because your fixed expenses are simply too expensive.
Perhaps you should trade in your gas-guzzling SUV for a more economical car.
Or maybe you should move to a cheaper apartment. Your monthly housing expenses should be at most 28% of your monthly income. Any higher than that and you should consider moving to somewhere less expensive.
4. Don't use your bonuses to splurge
If money is really tight, it's understandable why you'd be tempted to spend your bonuses on things you've been aching to treat yourself to — a vacation, a designer bag, or a new gadget?
But bonuses are your chance to finally get your head above the water and build up your safety net. Instead of spending it all, put it in your savings. Trust us, you'll thank yourself later.
5. Have a goal in mind
To change your bad spending habits, you should have an actual goal. Otherwise, where will you find the motivation to cut your daily Starbucks habit out of your life?
Maybe you're thinking of settling down. Perhaps you want to purchase property. Or maybe you might even want to start a business. Whatever your reason, don't lose sight of it and use it to make better decisions.
We hope this article on how you can stop living paycheck to paycheck was helpful!
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