Anyone who has lived paycheck to paycheck knows how stressful this lifestyle is. Unfortunately, this is an all too common situation.
1. Living Paycheck To Paycheck
Survey after survey for years has found that most people in the U.S. live paycheck to paycheck.
As COVID-19 started its relentless march across the globe, a third of U.S. adults found themselves having difficulty covering everyday costs such as food and rent. While people with the lowest incomes face the biggest challenges, even some high-earning households are struggling.
2. Common Reasons for Living Paycheck To Paycheck
CareerBuilder reports that 78% of U.S. workers live paycheck to paycheck and here’s why.
They are not paying themselves first
Too many people treat savings as an after-thought whereas it has to be a priority.
They aren’t tracking their spending
If you don’t know where your money is going, how can you stay on top of your finances? Not tracking expenses makes it too easy to underestimate your spending and even forget some expenses entirely.
They are using their credit card as an asset
As tempting as your credit limit might be, you must not forget that this is a liability you will have to repay, not an asset.
Not having an emergency fund
Without an emergency fund, the only thing keeping you away from debt is a single unexpected expense which is bound to arise.
They are not making enough money
As challenging as this might seem, especially these days when unemployment rates are skyrocketing, there is always a way to earn more. If you cannot get promoted, get a profitable side-hustle.
3. Tips To Break Free From Living Paycheck To Paycheck
To break free from living paycheck to paycheck you will have to make smart financial decisions and possibly scale back your lifestyle. The good news is that it’s always more about the mindset than the actual figures.
-
Create a budget to identify costs to trim
In order to figure out which expenses can you cut, you need to know which expenses you have, starting with your household expenses like your Oncor Energy costs which you can significantly reduce by practicing efficiency and adopting habits to conserve energy.
-
Eliminate debt
You can’t get ahead with debt as no one ever won by playing around with debt. Debt is sneaky as it comes packaged as student loans, car payments, credit cards, mortgages, personal loans, business loans, payday loans and even digital installment plans like Afterpay. First, stop taking on any new debt and stop living beyond your means.
-
Sell things
Sell whatever you can, but obviously not your kidney.
-
Get a side hustle
While you should ask for a promotion if you deserve one, look for profitable side hustles by looking at freelancing websites like UpWork to see how you can use your talents to earn an additional income.
-
Adopt a minimalistic mindset
Living below your means might seem terrible but it can actually be a mindful experience. Instead of eating a fancy dinner at your favorite restaurant, learn simple ways to cook a delicious meal at home. Unplug from Netflix and plug your heart in and see what happens. Be alone with your thoughts for a while instead of going outside to shop and look for fun, you might be pleasantly surprised how much of a good time you can have without spending a penny.
Takeaway
Unfortunately, living paycheck to paycheck is not a pandemic-specific condition. Over a year ago, more than a third of Americans said they could not cover an unexpected home repair or hospital bill without going into debt. These are scary times. For decades, U.S. wages have failed to keep pace with the rising costs of what many perceive as essential parts of life: education, healthcare, home and family. But the good news is that you can do something about it. It’s about time that we break the cycle of living paycheck to paycheck once and for all so we can start living again!