Living Paycheck to Paycheck?
Living paycheck to paycheck is the way of many, yet it sets you up for potential financial disaster. Car breaks down, AC needs repaired, unexpected medical bill…are you just one unexpected expense away from disaster? What about a job loss? Here are some tips to begin correcting your situation and learning a better way to live with more money and less stress.
1. START BY DEFINING YOUR VALUES
Values are what you feel is important in life. They’re the guiding forces to your personal principles, standards and behaviors. Think: Honesty, Happiness, Family, Tradition, Resilience, Peace, Self-Awareness, Passion, Modesty, etc. Give this some serious consideration, write them down and keep the list nearby to refer back to. These values will be your compass, or baseline if you will, to guide you to your ultimate goals.
2. GET ON A BUDGET
Are you flying by the seat of your pants when your paycheck comes in, or do you have an actual WRITTEN plan for every dollar? Having a well-thought-out budget in writing illustrates a clear picture on where your dollars are going. You are more prepared to handle an unexpected bill or emergency because you know where money is going and where things can be changed to cover an emergency.
Do you spend more than you make? Are you spending much more on groceries than you thought? How about meals out? Now that you see in plain sight what you are spending in every category you might be surprised to see where your money is really going. And now we’re getting to the good stuff because we’re empowered to implement positive changes and if you ask me, that’s exciting!
3. PRIORITZE THINGS THAT ARE MOST IMPORTANT
Now that we’re all excited to make some changes, Step 1 is to prioritize expenses. The top 4 priorities should always be: Rent/mortgage, utilities, food & transportation. If it’s a struggle to pay for just these 4 things, then we have to make some crucial and immediate changes.
If you are not struggling with these top 4 priorities, but are still struggling, the following strategies are still important to consider. If it’s easy to financially cover these priorities that’s great! We still have some work to do though, and the following strategies are still important to consider.
4. WHERE TO CUT BACK (OR ELIMINATE)
Whether you are struggling with just covering the necessities or are unclear of where your money’s going, there are still things to consider changing or eliminating. You probably thought you were spending just a few bucks a month at your favorite coffee shop or deli, but now that you have a budget in writing you see you’re spending much more than you thought.
Unless you’re really in a horrible financial situation, it’s probably not necessary to eliminate those things altogether. Maybe consider limiting yourself to 1 coffee a week instead of 5. Or, instead of going through the fast-food line, pack your lunch and go sit by the water at lunch instead. It’s healthier, less expensive and a short, relaxing get away from work. My point is there are adjustments to be made that don’t feel like punishments.
How about those streaming apps? This conversation in our house that pops-up on the regular! We eliminated cable to save money and now we’re spending even more than before on this endless list of apps. Are you doing it too? If you have a budget to look back on, you will know for sure.
5. DITCH THE DEBT
Credit cards and loans with extraordinarily high interest rates are keeping you in debt. Period. And if you are only making the minimum payments you can count on including that in your monthly budget for months and months if not years (which is the more likely scenario).
Credit can be a fabulous tool for many reasons; Scoring points on other things like travel; To use as a crutch if you have a true emergency; When used responsibly it builds your credit and can improve your score, making you an attractive risk to people like mortgage and auto lenders. The problem is most people don’t use credit cards wisely; they can’t stand the temptation and if they listen close enough some swear, they can hear it saying, “USE ME! USE ME!” I promise you - it’s not but believe me when I tell you I have been there.
There are several strategies for paying down debt, for instance, paying off the smallest balance first. Or, paying off the one that has the highest interest first. If you would like to learn more about the options, determine which one would work best for you, and devise and implement them, let’s chat. (PUT A LINK HERE) (I caution you about settling your debt as it can have a negative impact on your credit score and tends to make things more difficult in the future.)
6. LIVE BELOW YOUR MEANS
If you’re reading this blog post, chances are you are not in a position to live below your means. BUT it surely does not mean that we can’t get you there. A fellow coach and friend of mine is working with a couple who earn a really nice living, but they have $350K of debt, not including their mortgages and car loans. You read that right.
My point is that everyone’s relationship with money is different. Someone who makes $15 an hour who is broke is no different than someone who makes $100K a year and is broke. BROKE IS BROKE. (IS BROKE.)
And? There’s no shame in any of it - on either side. There are plenty of folks driving around in beautiful fancy expensive cars that are secretly praying they can make the next payment. Lots of things happen to lots of people, for lots of reasons. And ya know what? IT’S OK.
Whether you make $15 an hour or $100K a year, there are tools and resources for us to put in place for you. The implementation and outcomes will look different for each of you but there is hope and I can help.
IN CLOSING
There are lots of tools, resources and strategies to improve your situation. The key is to start. Take the first step and let’s chat.