According to recent research, 7 in 10 Americans live paycheck to paycheck.
If that’s you, you’re not alone. But it’s probably not the place you want to stay.
Here are 10 steps to stop living paycheck to paycheck.
1. Believe it is possible.
One of the biggest hurdles we have to overcome to make the changes we want in our lives is the obstacle of doubt.
If someone’s first reaction to the idea of living paycheck to paycheck is “it’s not possible because of x”, they will never make it.
And it doesn’t matter what x is. If you have already decided that your life circumstances are so unfavorable to you that you will never be financially successful, you are never going to.
Your situation may be more difficult than others, but it is by no means impossible. Believe it is possible and you have the power to make a difference.
2. Don’t wait for more money.
Just like you think, “This can’t be done,” you get stuck. The same goes for “I need more money to move forward.”
Of course, it is true that some people need to earn more money to be financially successful. But when you fall into the trap of thinking you can’t move forward without it, you don’t even get a chance to know it.
Let’s prove this:
Seven in ten Americans live paycheck to paycheck. But why is she living like 70% of people can’t afford it, because 70% of us don’t make enough money? Or is it because most of us buy things we don’t need and spend money where we don’t need to spend it?
This is an important distinction. Either because they are being held hostage by an unfair economic system that needs to be completely blown up, or because they need to take more personal responsibility for their excessive spending. Most of the time it seems to be the latter.
take a deep look at the numbers you will notice something important:
- 62% of consumers earning between $50,000 and $100,000 a year live paycheck to paycheck.
- 54% of consumers earning between $100,000 and $150,000 a year live paycheck to paycheck.
To put it in context, the median U.S. household income is $67,000More than half of American households earn twice the median income.
Of course, there are extenuating circumstances, but not for 54% of high-income Americans.
That said, if you’re stuck in the “I want more money” mentality, it won’t change.
Instead, the more money people make, the more money they spend.Time to get out of the paycheck and start a salary life now—I’m not waiting for a big raise.
3. Let it be the life change you most want.
There are more important things in life than financial success. But it’s a change worth pursuing because it brings peace and freedom to your life and family. It’s a worthwhile pursuit.
Finally, if you’re ready to make it happen, I recommend making it the life change you most desire. It takes seriousness to force introspection and energy.
Decide once and for all today that this is the victory you seek in your life.
And make sure immediate family members are on board with it. When trying to get buy-in from your partner or kids, explain the benefits in a way that resonates with them. Engage in a clear conversation about what it takes to achieve it. Steps 4 and 5 are required for this to work.
4. Identify the benefits of having less possessions.
The most important foundation of financial freedom is spending less than you earn. Cut your spending so you can get out of debt and start saving. We’ve all heard that advice before.
But why is this step so difficult to implement?
One of the reasons I think reducing spending is such a difficult step for many is because the solution sounds unappealing to so many. Buying less is like taking a step back in life. In a world where success is often defined by material gains, spending less sounds boring, unfashionable, and destined to be ridiculed.
I thought so too until I actually tried it.
Fourteen years ago, I made a deliberate decision to own and buy less. It turned out to be one of the best decisions I’ve ever made in my life. I have found that my life has improved in very important ways as a result of deciding to reduce most of my belongings and only buy what I actually need (rather than everything I ever wanted).
With less possessions and less spending, you have more time, energy and money than ever before. With fewer things to take care of, you spend less time cleaning, organizing and managing. There are more opportunities than ever to pursue your greatest passions in life, but we decided to define them.
Instead of running out of credit card bills chasing every new product or fashion line at the department store, you can invest your life in something worthwhile and meaningful.
This simple decision to buy and spend less cleared my life of financial frustration. It also paved the way for a more purposeful life.
See the benefits and be seduced by the lifestyle.
5. Sit down and do the math.
To overcome the paycheck to paycheck cycle of life, you need to sit down on paper and compare your income and expenses. But this doesn’t mean you have to track your daily spending and monthly budget in detail.
Instead, we recommend creating a spending plan. I have found it very useful in life.
To get started, determine your monthly take-home pay (net income, not gross income before taxes – the actual amount of checks or account deposits).
Second, compare your monthly fixed cost For monthly pick-up. These are expenses you currently have in your life that require a portion of your monthly income. No questions asked. Your actual monthly costs may (within reason) vary from month to month, but we know they will be incurred each month.
For example, fixed monthly costs include:Mobile phone, home ownership, kids school/activities, etc.
After determining your monthly income and monthly fixed expenses, the amount left over is your monthly disposable income (the rest of the money you have at your disposal).
This is the margin to start moving forward each month. If you didn’t spend other dollars on golf, concerts, dining out, cinnamon rolls, or travel, these dollars are dollars you can use to start saving and top your paycheck.
Of course, if your fixed monthly expenses already exceed your monthly income, you’ll have to drastically change your baseline standard of living.
6. Admit that you spend more money than you realize on non-essentials.
According to one poll, The average US adult spends $1,500 a month on non-essential items.
I’ve quoted that stat before, but the comments are always the same.
“Obviously, it’s only the rich.”
“No way! I wouldn’t spend that kind of money.”
And to some extent there is probably some truth in those answers. That’s an average figure, so about half of us spend less than that.
But if we’re going to stop living paycheck to paycheck, at some point we’ll have to admit that we’re probably spending more money on things we don’t need than we’re willing to admit. Once you buy them and start incorporating them into your life, you can’t imagine life without them and you begin to consider them essential.
Consider this. You might not think you’re spending $1,500 a month on non-essentials. But even if he spent half that ($800 a month), he would still be saving $10,000 next year just by not buying things he didn’t need.
The choice is yours.
7. Put your savings into another account.
Spend less as you begin to understand the benefits of having fewer possessions and change your spending habits accordingly.
Open a new account at your bank or use an online bank (capital one, for example) to keep those funds. Send money monthly, automatically or manually. Choose the appropriate amount and transfer it every month or at the beginning of the payment period.
Check your new account balance only twice a year. Let it grow slowly every month.
If you withdraw money from your regular spending account, you won’t be able to spend it.
If you want a goal to save, then one paycheck’s worth of savings is technically excluded from paycheck-to-paycheck statistics. That’s the goal here.
Other experts recommend saving 3-6 months on your living expensesThere’s nothing wrong with that goal, but it can seem very daunting to someone struggling to get ahead of just one paycheck. Therefore, we recommend that you select “Saving 1 paycheck” as your first goal to work on.
8. Accept a blackout period.
I promise not to buy anything for a month. (With a few obvious exceptions: food, utilities, health, etc.)
Experimenting without purchases has many advantages. Save money, reset your spending habits, free up time for other endeavors, and be eco-friendly.
there is great example Percentage of people committed to the experiment for a year or more.
I never embarked on a year-long experiment, nor would I ever want to. But I am inspired by their examples. I’m thinking, “If someone can do this experiment for a whole year, I can do it for a month.”
For most people, not buying anything for a month saves about $1,000. You may be closer to conquering paycheck to paycheck than you think.
PS: The point here is that you don’t need a lifetime change to be financially successful. Even short-term adjustments can help you reach your goal of putting one person’s paycheck into savings. That is why a pre-determined blackout period can be very helpful.
9. Don’t be afraid of drastic changes.
Cost of living figures vary greatly from region to region within the country. I also understand that some people just can’t make drastic changes. But that should never stop us from considering them.
Maybe you live happily paycheck to paycheck because you can live in a particular part of town or country.
Of course, if that’s the case, you probably didn’t click through to read this article in the first place. But if that’s the case and you’re constantly in a mess of “I don’t know how much it costs just to live in my area,” then you might be right. And you can always continue to choose it.
But whenever we want something new for our lives, change is required. Sometimes small, sometimes bold. Don’t be afraid to consider them all.
10. Be kind to yourself and take your time.
It is possible to overcome the paycheck to paycheck lifestyle. But that may not happen anytime soon. It may take some time. Especially if you have family involved in the decision.
And with any change that takes time, there will always be some setbacks and mistakes. Try to eliminate as many of them as possible, but be patient when they occur.
Taking two steps forward and one step back is one step closer to your goal than not trying.
Seven in ten Americans live paycheck to paycheck. But you don’t have to be one of those girlfriends.