You never know just how much something effects you until you’re out of that situation. If you’re living paycheck to paycheck, your stress level is probably sky high and your peace of mind is basement level.
There are ways to stop it, but you’ll want to setup systems and not rely on your will power to not go out and buy that new jacket you’ve been eyeing.
To get started, you’ll need to do a little research on your spending habits first.
Calculate Your Recent Expenses
When you’re first starting to research everything, you might not know exactly where the problem lies. Do you spend too much or do you make too little? It’s probably a little of both, but you have to look at the last couple of months to really know.
And don’t get me wrong, sometimes it’s not about how much you spend, but how much you make. If you truly look at your expenses, you’ll know if you have a spending problem or a money making problem.
Once you download your statement, categorize every single item spend and income that you made.
Figure Out If You Have a Money Issue or a Savings Issue
If you truly put every cent you earned toward your bills and necessities and still come up short, then you don’t have a savings issue. You need more money.
Honestly, I love finding ways to make more money more than I like finding ways to save. Maybe you’re in the same situation.
When you start creating different income streams, you’ll see that there are a ton of ways to make more doing little side hustles.
Create a Budget
I’m not a fan of budgets, to be honest. But it is totally true that what you measure, you manage. Meaning, once you see where your money is going, you’ll do a better job of taking care of your money.
I’ve used YNAB (You Need a Budget) to create my budget and I loved it. They’ve moved to a totally online system and I haven’t used them recently, but if you’re just starting out, it’s a great system.
I also really like the Zero Sum budget. YNAB and other personal finance sites really tout this. And it’s a game changer. Basically, once you get use to your budget and are working with it, you want to get to a point where you can use last month’s income on this month’s expenses. Believe me, it took me a while to figure this out, but it’s a great feeling when you can get to it.
I have a separate savings account where all our income for the month gets deposited. On the first of the month, I transfer that whole amount to my checking account and disperse bills and debits from there for the whole month.
It really helps change your mindset from living paycheck to paycheck and is an amazing feeling when you can pay all your bills at once and use the leftover for the monthly expenses.
AND, if you have any amount leftover at the end of the month, push that extra over to your ultimate savings account for bonus savings.
Do a No Spend Challenge
Make not spending your money on things a game. We like doing a no spend challenge because it can reset your brain a little on what’s really important to spend money on and what’s really needed.
Think about it, when you have no money, you essentially doing this challenge everyday. The hard part is when you get a raise, tax refund, or side money, our initial response is to spend that money.
Doing a no spend challenge takes away the option to even think about finding something to buy in exchange for your hard earned money.
This is a great challenge, especially when you start to get into “lifestyle creep”. This is where you start thinking you need all these things for your home, car, or vacation. If usually happens when your income increases. We usually call it “lifestyle accustomed to”.
Having a budget and automated savings should help with this, but doing a no spend challenge can definitely help reset things as well.
Automate Your Savings
If you ever look at the monthly FICA, Social Security amounts that come out of your paycheck every month, you’re probably shocked that so much can be taken out. But you usually don’t look at that often because it’s automatic and you have no control over it. Do the same with your savings. Even if it’s just $25 a paycheck, it will still ad up.
Let me say that again.
Just saving $25 a paycheck and earning every two weeks, you’ll have $650 by the end of the year. Then you’ll start to become a saver and feel more secure with your money.
Find an Accountability Buddy
If you know you need help with keeping your money and not spending, then find someone you trust and ask them to help you stay on track. You can do as little as just checking in with them on your progress to make sure you’re not spending where you shouldn’t.
Financial advisers seem to be paid for accountability buddies. But you can also find a friend, relative, or spouse who can help out with the process.
Change Your Mindset
I know this one sounds a little woo woo, but you have to have a better relationship with money to stop living paycheck to paycheck. You can’t have a fatalist view on money and say that it’s just always going to be this way and that there’s nothing you can do to change it.
It’s too easy to have the hopeless mindset like there is nothing you can do about it, because it takes the responsibility off of you and puts it out into the world. By changing that and realizing there ARE things you can do, you might not like the changes at first, but once you take control of your finances, you realize how different that feels.
Give yourself time and space to make these changes. If you’re in a relationship, make sure to get everyone on board for the same changes to make it easier on the process.
It’s no fun if you’ve changed your spending habits, but your significant other is still spending like there’s no problem.