Living paycheck to paycheck? Here’s how to overcome it!

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Written By Fintober Staff

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If you feel you are barely scraping by at the end of the month and could not save even a penny, you are not alone. Most millennials in 2022 are struggling with living paycheck to paycheck. Most of us want to be financially free, yet we can’t seem to be able to break the cycle.

If you are done with planning your life from paycheck to paycheck, we at Fintober can help you out. Read our ongoing blogs on budgeting and saving hacks as well as feasible side income alternatives. But, more on that later!

For now, let’s explore what living paycheck to paycheck involves in 2022?

What’s the meaning of living paycheck to paycheck?

What exactly is living paycheck to paycheck? This means all of your salary or your monthly earnings go towards your living expenses and you don’t have any money for saving or investing.

While this lifestyle may sound okay in theory, it can be highly unsustainable in the long run. You would be under constant stress to make ends meet, and any kind of emergency would be scarier than it actually is. Furthermore, It would also leave you grossly unprepared for the future.

Watch this video to understand how scary a paycheck to paycheck life can be:

Here are some effective ways through which you can get out of living paycheck to paycheck:

1. Manage your budget and set your priorities

The first and foremost step to stop living a paycheck to paycheck life is to be aware of your spending. You need to budget your rent, bills, taxes, payment, food, etc. This way, you can track all the money you are spending. You will see the extra money you are losing, which you can easily save or use in a better way.

It is easier than ever to formulate a budget and keep track of your expenses today with so many budgeting apps. Read our blog on different budgeting apps here.

If you’re just beginning, remember not to be harsh with yourself when you’re budgeting. Leaving yourself room for indulging in little treats here and there can help you sustain a budgeting habit for a long time. Your treats can include dining out once a week or a visit to a spa every two months.

Set aside a separate money fund for every necessity

2. Reduce your set monthly expenses

Shakespeare first said, “Neither a borrower nor a lender is.” In this fast-paced and materialistic world, we want everything right away. EMIs and credit card debts have made it tempting to buy things we can easily save up for. These can easily rack up your monthly expenses.

While you can’t ignore absolute essentials like mortgage/ rent, insurance, internet bills and utilities, you can reduce your other expenses. For instance, instead of buying lunch every day, pack it with you. Have a cookout with your friends instead of hitting the latest nightclub.

Saying no to debts is the first step to getting out of living paycheck to paycheck. Stop buying everything with your credit card. You do not need to buy that coffee maker in four “easy” instalments. 

To buy any new thing that requires a lot of cash, save up. Calculate the total amount you need for it. Give yourself a timeframe to save up that amount and buy it with cash! This will reduce the pressure on you and allow you to save more out of your paycheck.

3. Find ways to increase your income

You can still find that you’re barely scraping by despite living a bare-to-bone lifestyle. In that case, you might have to look out for ways to increase your income by getting a better-paying job or starting a side hustle like tutoring or travel blogging. 

Learn how to become a successful travel blogger by clicking here.

The enormous success of online gigs in a post-covid world has shown us that it’s possible to earn decent money from a side hustle even if you are a student. The money from your hustle can go towards your investment or an emergency fund, and help you escape living paycheck to paycheck.

Other great side hustles include:

  1. Content writing
  2. Social media management
  3. Graphic designing
  4. Data entry

4. Find a place that’s rent-controlled to avoid living paycheck to paycheck

If you’re living by yourself, your rent would be a significant portion of your paycheck. Therefore, you should pay closer attention to whether you’re really getting your money’s worth for your rent.

While living in a dingy studio with no running water to save money would be taking it too far, consider what other things you can adjust without saving up on rent. For example, you can take up a unit without a washer and dryer for less if there’s laundry in the building or in the vicinity. You can also consider taking a place that’s slightly away from your workplace but is significantly cheap because of its location.

5. Put away extra money into an emergency fund

The recent pandemic has really driven home the importance of saving for a rainy day. While it can be difficult to save money on a shoestring budget when you’re living paycheck to paycheck, it’s important to save the extra money when you have a wind flow.

Have an emergency fund bank account

Our consensus is 50-20-30. 

  1. 50% of your total salary should go towards essentials (rent, insurance, utilities, etc.).
  2. You should spend 20% of your salary on indulging yourself or seasonal shopping
  3. You should immediately save the last 30% into a good investment option. 

Deposit your monthly saved up amount in the bank. Make sure to not use it except for emergencies. 

Saving money to buy huge things like a car or a fancier electronic gadget will help you escape debts or loans. When you need to purchase something costly, these small savings will help you get by without stress.

6. Have both short-term and long-term goals to get out of living paycheck to paycheck

Short-term goals are efficient in reducing debts or more immediate financial pressure. Say you have a debt of $1000. Giving yourself a realistic timeframe of 1 year brings down your to pay it off monthly debt payments to $83. 

If your current expenses cannot accommodate this amount, ‌think about cutting down your other expenses or find other sources of income. 

Having a long-term goal can help you avoid getting disheartened from slow results‌. Living paycheck to paycheck life is hard to get out of. If you have been stuck in this trap for years, have patience. You will not see the results happening overnight.

7. Use a different bank account to credit your savings

More than often, we end up splurging through our savings if they remain in the same account as our daily expenditures. Instead, deposit your savings into a different account, preferably from where it’s not so easy to withdraw money. This will deter you from using up your savings at the first instance of monetary trouble. 

Deposit your savings into a different account than the one used for your expenses

It will be difficult, but the outcome will be worth it. Within a year or two, you would have saved that you never thought possible. This is possibly the best advice for you to leave living paycheck to paycheck life for good.

Escape living paycheck to paycheck

Living paycheck to paycheck need not be the inevitable reality of life that many deem it to be. Many have broken this cycle, and so can you. 

The steps above are quite practical and achievable as long as you are patient and committed. You should be able to notice notable differences within a year or two, finding yourself less stressed.

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