You should not be living paycheck to paycheck. In this article, we will help you stop living paycheck to paycheck.
I’m not kidding. According to the American Psychological Association, financial worries are the largest cause of chronic stress for Americans.
Chronic stress increases your cortisol levels – also known as the “stress hormone”. This is not easy for one individual to survive like this.
This causes great difficulty to fulfill the expenses so far. It causes stress and anxiety living in this situation for a long time.
These consequences gradually start affecting the other sides of living. When a person is living paycheck to paycheck it affects his\her life on other levels as well.
In this situation, a person gets mentally disturbed and starts facing stress and anxiety, and cannot perform well in other phases of life.
Once you are mentally disturbed facing financial issues would affect you physically day by day. It is such a serious issue to observe that most of the people in our surroundings are suffering from this. We have to pay attention to such things that cause stress and anxiety.
So far people avoid noticing that someone is going through something serious. Most of the people going through this issue are not comfortable sharing it with someone else.
Keeping all that in mind we must have to drag ourselves or other people going through this and be kind to them.
A huge amount of Americans are facing the issue of living paycheck to paycheck. This is not useful for the population suffering from this and this issue is increasing day by day. All you need to do is to stay kind and supportive.
Why Does That Matter?
Well, elevated cortisol levels interfere with learning and memory, lower immune function and bone density, and increase blood pressure, cholesterol and heart disease.
Living paycheck to paycheck can be stressful and therefore slowly causes your mental and physical health to deteriorate.
It only makes sense that one of the first tasks to tackle when getting your finances in order is to break out of the paycheck-to-paycheck cycle.
First, let’s explore the bad money habits that cause this lifestyle.
Why You’re Stuck In The Vicious Paycheck To Paycheck Cycle
The root cause of (nearly) all money problems is that people don’t save enough (or any) of their earnings. The stressful paycheck-to-paycheck lifestyle is a symptom of this problem. You’re probably thinking:
“Uh duh! If I could save enough of my paycheck, I wouldn’t have to live paycheck to paycheck.”
So let’s talk about the bad money habits that so many of us are guilty of which keep us from being able to save enough money:
- Spending more than you can afford
- Your bills are too high
- Not working towards building an emergency fund
- No clear savings goal
- Your income can’t sustain your lifestyle
- Your debt is eating away at your income
Enough with the problems, let’s find the solution. Ready to stop living paycheck to paycheck?
If you’ve only ever known living paycheck to paycheck then getting out of the cycle is going to take doing something you’ve never done before.
You stop living paycheck to paycheck when you have a decent-sized emergency fund built up and enough in your bank account to not have to worry about having enough money for rent or groceries. You need to pay attention to your surroundings instead of getting depressed.
I know it is not easy to not get stressed in these types of situations where you are hardly making hand-to-mouth. You need to understand that you are not the only one who is facing this and going through these types of hurdles.
You have to get up on your own to get a better life for yourself. I know it is one of the hardest things to survive when you know that you can’t make your expenditures fulfil.
You feel like you are always under pressure of paying your bills and thinking all the. You are stuck thinking about this all the time that from where you have to fulfil your basic needs to survive.
This leads you towards stress and anxiety and it also results in destructing your skills. And moreover, when you face this problem you are unable to discover more skills coming up.
Few signs that you are living paycheck to paycheck:
Not everyone around us knows that they are actually living paycheck to paycheck and it’s affecting their lives.
Mostly, people don’t know about getting mentally disturbed until their mental disorder increases and affect them physically.
You won’t be able to live independently till you are living paycheck to paycheck. This will not provide you with secure independent living.
Ignoring the signs you can not be able to overcome this. You can only make it over once you get to know how you want a good living and want to enjoy your life and money as well.
If you want independent living, you need to stop living paycheck to paycheck. This affects your mental health initiatives, if you are not aware of getting stressed in time then it might lead you to face serious mental disorders.
So for the sake of not being a victim of these circumstances you need to understand as soon as possible. Here are a few possible ways to get rid of living paycheck to paycheck.
Difficulties in career building
Most people are facing some serious kind of difficulties in building a career due to this fact. First of all, when a person comes out to be independent they face this kind of difficulty at the beginning.
This might result in the destruction of that confidence of a person which results in great difficulty in building a career.
When an individual comes out to build a career he\she has huge confidence in building their career. And more they face the issue of living paycheck to paycheck, the more they start losing goals.
Once a person loses confidence in his\her personality then it is so hard to get up again. For avoiding these circumstances you need to work smart and set your goals at any cost.
Once you set your goals and manage your living style then you are able to control your financial status.
Everyone wants a strong and independent financial status on good terms. For this, you have to work smart as compared to working hard.
You can do more than one job or any site business whatever suits you or you think you can do. Part-time jobs and site business is an option but you have to choose your option wisely.
Managing your expenditures
If you know how to manage your expenditures then you would be able to save more. If you will make a proper managing system of your expenses you will see a great difference.
And with the passage of time, you will see how comfortable you feel after scheduling. You must know how much of your earnings you have to spend on which expense.
You need to categorise which of your expense is more important and want more of your income. In this way, you would be able to figure out which of your expense does not need to spend as much as you think.
In such a way you would come to know that there are a lot of extra things that you carry and can be ignored. You can make your life more comfortable by managing things.
Once you get rid of living paycheck to paycheck then you might be able to perform well in your daily life.
You can set up a routine and work through that so that it might help you to fulfil your tasks and gives. It will also help you in maintaining your physical and mental health.
If you’ve only ever known living paycheck to paycheck then getting out of the cycle is going to take doing something you’ve never done before.
You stop living paycheck to paycheck when you have a decent-sized emergency fund built up and enough in your bank account to not have to worry about having enough money for rent or groceries.
We think it is important for people to get to know how should they manage their money and make budgets. It is very important to manage money so that one can enjoy life and spend money as well.
First of all, you need to point out the priorities that are most important to you. Doing this can help you get rid of overthinking and can make your daily tasks comfortable.
Focus on your priorities can help you to get rid of stress and anxiety. First of all, you need to make a budget and focus on it to avoid any kind of misuse of your earnings.
Money shouldn’t be your priority but your priority should be how to manage budgets. You need to overcome your extra expenditures unless you are in a stable position to spend.
This may lead you to be independent with the passage of time. Managing your tasks will help you to go through your tough times.
All you need to do is you must know how to manage on your own. And how you can make things done with your ease and get through things.
You can all overcome your hard times on your own. Getting out of stress is only up to you and how you react to the circumstances around you.
Also read: Best Ways To Make 100 Dollars Fast
Here’s a 5-step program to stop living paycheck to paycheck:
1. Track your expenses
The first step is to track your expenses. Lots of people recommend that you start by creating a budget, but in my experience, people who are new to budgeting tend to underestimate how much money they spend in each category.
You can be good at creating a budget when you are used to it. And if for the first time you are creating a budget then you can not carry it properly.
Lots of people recommend that you start by creating a budget, but in my experience, people who are new to budgeting tend to underestimate how much money they spend in each category.
That’s why it’s important to know where you’re money is disappearing before creating a budget. To do this, you can go through your bank account or credit card account and sort every transaction into categories.
The categories you sort the transactions into are up to you to decide. Here’s what mine looked like:
- Insurance (car/health)
- Home bills (gas/electricity/water/internet)
- Subscriptions (Netflix, Hulu, etc)
- Eating out
- Health (Gym, haircuts, etc)
Going through your bank account and recording each transaction will take most people a long time.
Here’s a pro tip: Sign up for a free Personal Capital account. You can hook up your bank or credit card account and it will automatically sort your transactions into categories!
It’ll even tell you how much you spent every month on each store. Personal Capital is free to use and is my favorite personal finance tool (here’s my in-depth review).
Currently, they’ll give you $20 just to sign-up for a free account… Once you have all your transactions sorted, you’ll start seeing your patterns of spending.
When I first started tracking my expenses, I noticed right away that I spent way too much money on groceries every month.
I was spending over $1000 for one person! Day to day, I never noticed how much I was spending on groceries because my bill was always under $100.
I just never realized how often I went grocery shopping.
- Trying to save money on groceries? Check out my review of Ibotta
Hopefully, you’ll also notice that you’re spending too much money on certain categories. Now it’s time to take this information and create a realistic budget.
2. Create a budget
The next step is to create a budget. Having a set budget for each spending category is the best way to make sure you’ll have money left over to put towards your emergency fund and bank account.
Having extra money in your bank account and emergency fund is the only way to stop living paycheck to paycheck. There are many different schools of thought when it comes to how to budget:
Zero-based budgeting is a way of budgeting where your income minus your expenses equal zero. You have to make sure your expenses match what’s coming in during the month and every dollar gets a function.
The 50-20-30 Rule helps you build a budget by using three spending categories: 50% of your income should go to living expenses and essentials.
This includes your rent, utilities, and things like groceries and transportation for work. 20% of your income should go to financial goals, meaning your savings, investments, and debt-reduction payments (if you have debt, such as credit card payments).
30% of your income should be used for flexible spending. This is everything you buy that you want but don’t necessarily need (like money spent on movies and travel).
Envelope Budgeting: With the envelope system you use cash for different categories of your budget, and you keep that cash tucked away in envelopes. You can see exactly how much money you have left in a budget category just by looking at your envelopes.
There are plenty of other ways to budget. Which one you choose is up to you. The important thing is to choose a budget that you will stick to.
3. Build an emergency fund
With the extra money you save every month from your budget, you need to build an emergency fund.
I already wrote a guide on what an emergency fund is, how much you need to save, and where to keep it. The important part is that you actually take the time to build one.
4. Automate your savings
After a month or two of following your budget and making any adjustments, you should start automating your finances.
The first thing you can do is to automatically put a portion of your paycheck into your emergency fund and savings account.
If you’re paid via direct deposit then this is easy. Most employers have no problem funnelling part of your paycheck into a different account.
You just have to ask. Here’s a great article by Forbes on how to automate your finances.
5. Earn more money
Once you have a budget and have automated your finances, the next step is to increase your income.
By increasing your income, you can increase the amount you put towards your savings AND the amount of money you can spend on a monthly basis to increase your standard of living.
There are many ways to make extra money. You can get a second job or start a side hustle. Here’s an article I wrote about how to make extra money that outlines several different methods you can try.
Tools To Help You Stop Living Paycheck to Paycheck
Personal finance tools and apps can make escaping the paycheck-to-paycheck lifestyle easier. Here are a few different tools that I would recommend trying out:
- Personal Capital: I mentioned Personal Capital earlier in the article as a great way to see where your money is going. It’s also a great net worth tracker. You can read my full review of Personal Capital here or sign up for a free Personal Capital account and get $20 for free here.
- Trim: If you’re like me and have lots of subscriptions (Netflix, Hulu, Amazon Prime, etc), then you may want to try out Trim. It’s a great way to save money. It automatically cancels subscriptions you no longer want, negotiates your Comcast bill, finds you better car insurance, and much more.
- Ibotta: This is my favorite way to save money on my grocery trips. Ibotta is a cash-back app that lets you upload your receipts to earn money for certain items. It’s free and easy to use. You can read my full review of Ibotta here or sign-up for a free account and $10 sign-up bonus here.
- Paid survey sites: If you’re sitting on the couch watching Netflix, why not earn some extra money at the same time? I wrote about the three best survey sites of 2022 here. If you just want to get started, those sites are: Swagbucks, SurveyJunkie, and Inbox Dollars.
Stressed About Financial Issues Continuously
First of all, when you are facing some financial issues or you are not strong for such a long period it drags you towards stress and anxiety.
And you start getting stressed every time. It converts into continuous stress you start feeling unable to do anything besides thinking of what to do next to fulfil your bills and other expenditures.
Due to this continuous stress, you might feel like losing hope and confidence. This lack of confidence may lead you to failure in your professional life.
You may lose all your skills to make things work with time. You only have to stop ignoring the signs and keep working to overcome this issue of stress and anxiety.