How to not live paycheck to paycheck anymore.
Are you tired of feeling like there is never enough money? Are you ready to learn how to stop living paycheck to paycheck? It IS possible and I’m here to tell you how!
Why Do I Need To Stop Living Paycheck to Paycheck?
I had someone ask me this question a few months ago. It all started when I was encouraging my readers to save more money each paycheck, and someone asked me, “Why? What’s wrong with living paycheck to paycheck?” I understand this reasoning and think it’s a very valid question! So, today I’m going to explain exactly why it’s important.
Here are a few benefits of having some extra cash every pay period:
- Less Stress. If you have extra money each pay period you will no longer be having to worry during those last few days before you get paid. You won’t have to wonder whether you will have enough money to get you through to the next payday.
- Prevent Debt. Emergencies come up. Unexpected expenses arise. This is just a simple fact of life. If you are able to save a little bit each pay period you will have the cash needed to pay for these emergencies, rather than putting it on a credit card.
- Save For Your Future. More money means more opportunities to save for the future. This might mean being able to save for retirement or grow a sinking fund for a fun purchase.
Follow the easy steps below and you will have more money in your budget, and more importantly, more money in your bank account.
Step #1: Make A Zero Based Budget
The very first thing you need to do to stretch your paycheck is to make a budget. I highly recommend using a Zero Based Budget.
A zero based budget is when you budget every penny of your paycheck so that your income and expenses are the same amount. This does NOT mean you spend all of your income. It simply means that every dollar has a place and a purpose within your budget.
To make a zero based budget you will need to first write down the amount of money you expect to earn this pay period.
Next, write down all of your expected expenses, don’t forget contributions to sinking funds, retirement, etc.
Your goal will be to get your expenses to equal your income. For a full tutorial on making a zero based budget check out this article.
There are many different ways to budget! We prefer the You Need a Budget software. You can also use just plain ol paper and pen. feel free to download my budget worksheet below. This is a great place to get you started!
Step #2: Track Your Spending
Now that you have made your budget it’s time to track your spending. And, when I say track your spending I literally mean to track every.single.penny. you earn.
It’s easy to track your spending, but it does take time. You will need to write down everything that you buy and what budget category that item falls under. If you buy a 50 cent candy bar, write it down under the “Food” category.
This exercise gives you a huge amount of insight into how you are spending and exactly where your money is going. Sometimes, we don’t realize how much a few bucks here or there add up, but they do!
While you are writing down your expenses, look for trends in your spending and evaluate how you could change some of these habits.
Maybe you tend to always buy items on a stressful day, could you find a new way to deal with stress?
Or perhaps you are constantly picking up a Starbucks on your way to work, could you limit yourself to just one Starbucks a week?
Remember, it’s OK to spend money! But, if you are wanting to save a little more, you will need to find some ways to cut back. Tracking expenses is a great way for you to figure out just how to do that.
Step #3: Cut Out Unnecessary Expenses
The third step when learning how to stop living paycheck to paycheck is to cut out all unnecessary expenses. Look through your spending tracker and pick out a few items that you could cut out of your budget. This might be eating out, going to movies, cable TV, daily coffees, etc.
Need some inspiration about what to cut? Be sure to check out these articles:
How to Cut Your Budget; When There is Nothing Left to Cut
What we cut from our budget to save over $2500 a year
11 Things to do Today to Lower your Monthly Expenses
Don’t forget to look at the expenses that you can minimize on, rather than cutting out completely. Perhaps you spend $150 a week on groceries, could you reduce that to $130 a week? That would be an extra $80 a month or $960 a month.
Step #4: Save Your Bonus
Whenever you are offered a bonus or raise at work, save it! I know the temptation when getting these raises is to “treat yo self”, but you are already use to living on less. Use that raise to bump up your savings account, or other finance goals. I promise it’s worth it!
For example, if you are offered a 5% raise, put that extra 5% into your savings each paycheck. This is one of the easiest ways to save more without having to sacrifice the life you are use to.
If you truly do not want to save all of your raise, maybe just save part of it. Put 90% of your raise into a savings account, and use the other 10% for spending.
Step #5: Automate Your Savings
Set your checking account to automatically take a certain amount of money each month and deposit this into your savings account. This is an easy way to save for retirement, emergency fund, or anything else you need, without having to actually do it yourself!
When your savings is automatic you don’t ever have to make the choice whether to save or spend on something else, that decision has already been made for you! You’re saving it.
My husband and I made all of our savings automatic years ago and it has made a world of difference in the amount of money we are able to save each month. This money doesn’t even feel like it belongs to me, because it goes straight to savings. It feels amazing to be able to watch that saving account grow regularly and consistently.
Step #6: Make More Money Through Side Hustles
Last, but certainly not least is to find a way to make more money. If you would really like to save more each month, you might need to find a way to increase your income. This doesn’t necessarily mean you have to get a second full time job.
All you need is a few extra hours each week to devote to a side hustle. If you are struggling finding that extra time, try to give up one thing in your life and use that extra time for side hustling. This might be your nightly 30 minute TV time, or maybe those few hours you sleep in on Saturdays.
When choosing your side hustle, be creative! There are so many possibilities! Look at your talents and interests first to find the perfect fit for you.
Are you crafty? Perhaps you could make crafts to sell on Etsy. Do you like to write? Consider starting a blog! Maybe you enjoy teaching? Look into teaching kids in China (all from home)!
- Related: Legit Ways To Earn Money From Home
If there’s a will, there’s a way!
If you are really wanting to stop living paycheck to paycheck, it is going to require some sacrifice and effort.
I truly believe if you follow the six steps I shared today you will be able to find more room in your budget and you will be able to save more money each month.
Here is your friendly reminder that these steps aren’t easy! Nothing good in life is easy! Cutting expenses and finding extra money will take some time and sacrifice on your part.
But, I can also promise you that if you are willing to put in the work and the dedication you will find extra money in your budget each paycheck, and this can change your life!
7 Apps That Will Help You Save Money
The Best Frugal Living Tips You Need to Know
How to Save Money When Eating Out
Liked what you read? Be sure to pin it for future reference:
Lovonne Kirst says
Hello, I singed up with my email after the Pantry Challenge started so I’ve only gotten emails starting with week 2 and so on…
I admit that at the time I wasn’t entirely mentally committed because I wasn’t sure what the Pantry Challenge was but I was definitely intrigued. I’m wondering if you could explain to me what the purpose of the challenge is….is it using everything possible in our pantry for a month with minimal grocery shopping otherwise? I love the idea! I admit, I’ve been watching your social media from afar and am mentally preparing myself to “dive into” your ideas for Budgeting 🙂 And I’m also exploring the idea of a “side hustle”. I like your website and I’m glad I’ve found you 🙂 Lovonne (aka Love)
Sweet Frugal Life says
The purpose of a pantry challenge is to cut your regular grocery budget in half. This saves you money throughout the month because you aren’t spending as much on food. I try to eat what I have in my pantry already, be creative with meals and learn new grocery saving hacks.
Thanks for your comment! I hope you find the success you are looking for!