Craig Dacy has shared some financial advice as a guest poster before. He reached out asking if he could share about his new course Taking Control of Your Income. I took a look at his course and asked him about it. He told me it is really all about how to stop living paycheck to paycheck. So today he is sharing a bit more about that with us. I hope you enjoy this guest post. Until Next Time- Truly Love, Cassie
Feel like a hamster in a wheel when it comes to your money? Don’t worry, you’re not alone. A study performed by the Wall Street Journal found that 3 out of 5 Americans don’t have the money to cover an emergency if it arose. This means that a large majority of people in America have little to no savings and are wanting to know how to stop living paycheck to paycheck.
At some point in our lives, most of us have lived this way. I know I spent the majority of my adult life trapped in this lifestyle. The problem is a lot of us know it’s a problem but aren’t sure how to stop living paycheck to paycheck. If every dollar we’re bringing in seems to be gone before the next check comes in, how can we get ahead? That’s a good question.
Here is how to stop living paycheck to paycheck once and for all:
1)Get Current on Your Bills
Before you can get ahead, you have to at least get caught up. That means making sure you’re current on all of your bills.
This is a great time to find ways to make extra money. Talk to your boss about picking up some extra hours at work. Overtime can be a great way to generate money and help you reach your career goals. If that’s not an option, clean out your attic and closets and have a garage sale. Pick up odd jobs like cleaning houses, mowing yards, or babysitting (it’s not just for teens anymore).
You might even consider picking up a side job. There are even companies such as Uber and Instacart that have a simple application process and don’t require extensive interviews. You can make your own hours and your earning potential is up to you.
Focus all of the extra money you bring in toward getting caught up on your bills. Not only do late payments put you at risk for having your water or electricity shut off, but the late fees alone make it challenging to gain traction.
2)Create a Monthly Budget
A budget is a written plan for your money. This means you sit down and decide where you will spend it before it even appears in your back account.
It’s hard to make progress when you don’t have a clear picture of where you currently stand and a plan for where you’re going. Sit down before the first of the month and decide how your money will be spent. Write down your monthly income at the top of a sheet of paper and start listing expenses in order of importance. You should include anything and everything you need to spend money on. Things like your mortgage, utilities, gas, food, clothing, internet, gifts, insurances, and entertainment. Make sure you put a dollar amount next to each one and stick to it. Whatever you have left at the bottom goes straight toward getting current on your bills, building savings, or paying off debt.
3)Track Your Spending
Writing a budget is one thing, but tracking our spending is a where we typically stumble. That’s why using cash envelopes is the best option. It’s impossible to accidentally overspend when using cash. Think about it; you’re about to go out for a steak dinner and you open up your restaurant envelope to see only $9 inside. What can you do? Well, you have two choices. Either bust your restaurant budget, or get a Big Mac instead.
I’ve seen cash curb the most intense spending urges. However, if cash isn’t your thing, there are other options. Look in the app store on your phone for some budgeting envelope apps. There are multiple apps out there, but I highly recommend the Everydollar app. You can log the purchases you make so that you always know how much you spent and how much you have left in an envelope. The only downside is if you forget to enter an expense, your budget will be thrown off.
4)Cut Your Spending
This portion is going to be a bummer. If you want to stop living paycheck to paycheck, it’s time to cut your spending. Now I’m not saying you can’t have fun anymore, but trimming back a little will help you reach your goals. Once you establish your roots and build up some savings, you can always go back and bump of your lifestyle.
A trick I recommend is using the 10% Rule. Go through your budget, choose some categories that have flexibility, and cut them by 10%. If you cut your entertainment, restaurant, and clothing budgets by 10%, you won’t notice a drastic lifestyle change. It’s really not much of a decrease. However, when you add all of the money you save together, you can really make some good progress toward building your savings. There are a lot of different tips for saving money that can be useful.
If you are tired of living paycheck to paycheck these four tips will start you off in the right direction. If you are looking for more extensive support you can check out my new course Taking Control of Your Income. That is where we dive deeper into each of these areas along with providing printables and other key strategies.
What categories in your budget could use a trim?
Craig Dacy (@craigdacy) is a Financial Coach and money guru at CraigDacy.com. He is on a mission to teach folks how to break free from the paycheck to paycheck cycle one budget at a time.