How to stop living from paycheck to paycheck – RISMedia

Many Americans are caught in a paycheck-to-paycheck cycle. If you’re struggling to make ends meet from one payday to the next, you understand the stress and anxiety it can cause. Here are some strategies to stop living from paycheck to paycheck and invest money towards an emergency fund, retirement, your kids’ college education, and other long-term goals.

Find out where your money goes
The first thing you need to do is understand what you are spending money on. You might think you know where your money goes, but you might be surprised at how much you spend on takeout, coffee, entertainment, and other things you really don’t need. These purchases can add up quickly, trapping you in the paycheck-to-paycheck trap. For a month, jot down everything you buy so you know exactly how you’re currently spending.

Create a budget
Write down the amount you earn each month (after taxes, health insurance, and other deductions). Then think about how to distribute the money. You need to make sure you have enough to pay for basic necessities like housing, utilities, groceries, and transportation. Once you’ve accounted for these, you can figure out how to cover other expenses.

You may need to reduce or even eliminate spending in some areas to cover all of your expenses and have money to spare for the future. For example, if you eat out a lot or grab a coffee every morning on your way to work, cook at home more often and make your own coffee. It might be less convenient, but it can save you a bundle and get you started on the financial security journey. Look for inexpensive or free forms of entertainment. For example, you can stay home and watch TV or visit a local park instead of going out to dinner and seeing a movie at the cinema.

pay off debts
If you currently have high-interest credit card debt, it’s probably one of the main reasons you’re living paycheck to paycheck. Make up your mind to cash it out as soon as possible. If you haven’t already, look for a balance transfer credit card with low or no interest rates, or consider a debt consolidation loan.

As you work to pay off your debt, don’t pile on more debt. That may mean giving up something or having to postpone a purchase until you’ve saved up the money.

Increase your income
If these steps aren’t helping you reach your goal as quickly as you’d like, you may need to increase your income. You might want to take a part-time job, a side job, or find a way to make money from a hobby. Working even a few extra hours a week can make a difference in your overall income and help you stop living paycheck to paycheck.