Are you living paycheque to paycheque? Getting strapped for cash before your next paycheque is the worst scenario, but it is very common. Most people live from hand to mouth struggling to set aside money even for an emergency. Even if you cut down on savings, you will have left minimal money for your emergency cushion. Savings and retirement funds are imperative to build to afloat when life throws you a curveball.
Staying on top of your expenses seems to be threatening, but this is possible if you manage your funds sensibly. Of course, you need to create a budget, but this will work when you have taken stock of your funds. From cutting down on your discretionary expenses to shifting your attitude, you will have to work on all financial areas to get in control of your finances.
Take Hold of The Facts
Before you will create a monthly budget, you need to dive into facts. Unless you know how much you are earning and how much you are spending, how will you make any meaningful changes? Make a record of all incomings and outgoings. Having everything in front of you will help you figure out areas where you could improve. Jot down even a tiny expense you make, add up them and compare with your gross income. If you are spending more than you earn every month, you need to trim down.
One of the biggest reasons for running out of money is spending on discretionary expenses. You should start by cutting down on unwanted things. It may include gym membership, magazine or newsletter subscriptions, eating out, cinema and the like. These expenses do not seem to be very big, but they add up. Whittle down these nonessential expenses to have some room for your savings.
Stop Being Reliant on Loans
Many people living paycheque to paycheque rely on payday loans. These funding sources are expensive leaving borrowers broke after the final payment, which results in further borrowing money. This cycle continues and they fall in a predatory debt spiral. Once you get tied up with a debt web, you will never be able to get out of it. Before you set aside money, you should settle your debt completely.
Take the money you are saving from cutting down your unwanted expenses and throw it to the debt. You are unlikely to pay off the whole debt with that chunk of money. Therefore, you should ask your lender if they are ready to accept minimum payments. If you have multiple debts, try to aim at paying off high-interest loans. You can also ask your lender to put you on a different repayment plan. Many direct lenders allow this facility to borrowers who have been struggling to repay very bad credit loans no guarantor direct lender. However, you need to inform them of your financial condition.
Transfer Money To Your Savings Account
No matter how much you earn, you should aim at savings. Even if you are on low wages, try to put aside as a minimum amount as possible. Figure out exactly how much amount you need to meet your regular expenses such as food, travel, utility expenses and the like. If you whittle down your unwanted expenses, you will have room for your savings.
Try to open a savings account. If you forget to transfer a certain proportion of your income, consider automation. Get your salary account linked with your savings account. As you receive our paycheque, the savings account will automatically pull money as per the set limit. This will also help you fund your unexpected needs.
Achieving a financial goal is not very easy when you are living paycheque to paycheque. You are likely to give up in the middle. Try to stay motivated or take help of your family or friend to be on the track. When you feel in low spirits, look back to see how much closer you have come to your savings goal. Even a slight improvement can push you toward your goal.
The Bottom Line
You can get rid of paycheque to paycheque cycle if you develop money management skills. Whittle down unnecessary expenses, pay off your existing debts, set a saving goal and stay motivated.