The commonwealth of Virginia is one of the richest states in the nation, but it’s also one of the most expensive. The median income there is $48,078, and the average cost of living is $54,859. What’s more, those numbers are the median and average, mind you. The top 10th percentile of earners in Virginia take home $124,401, the lowest 10th percentile take home $24,000. (For reference, the national median is $52,250 and the national average is $50,000.)
Most of us have grown up in the world of the American Dream, where hard work and dedication to your career would get you the big house and family, especially in the United States. But that was before the economic recession of 2008. Many of us now have to live paycheck to paycheck, and that’s when things start to get a little tricky.
In the money world, there is a lot of talk about people who wake up at dawn every day to make their money work for them. But then there’s the vast majority of people who do almost everything right but never seem to get ahead. We at bestmoneymind.com see this as a problem that can be fixed, and we have the solution for you.
This article may contain affiliate links. Click here to read my disclosure policy. Do you live from day to day? You’re not alone. According to a study by Highland Solutions, more than 63% of Americans live from paycheck to paycheck. According to the study, the pandemic has increased the number of people who feel that their budget is much tighter and that they have even less flexibility. Unfortunately, this is not surprising. Money can be such a problem when you’re wondering how to pay bills and basic expenses. However, in this guide, I will share with you a comprehensive roadmap that will help you break the pay cycle once and for all. You’ve probably heard the term before, but you may be wondering what it means to live from day to day?
Salary before payroll
Living from salary to salary means that your life largely depends on your next salary. It usually goes like this: They receive a salary from their job and continue to pay bills, buy things for the house, pay off debts and meet other wants and needs. Before you know it, your cash flow is seriously depleted after paying the initial fees. Worse, unexpected expenses or emergencies may arise. If you don’t have cash, you may need to use a credit card or take out a loan. Then the next payday comes and you can breathe normally again. They like to pay bills and make payments on credit cards or loans. Only to find out that you’re very soon back to square one, with a very low balance and few options while you wait for your next paycheck. If you’re a visual person, life from paycheck to paycheck can look something like this. The worst part is that it’s a cycle, and it’s hard to break. Some people live day to day for years, or even their entire lives. This often means:
- Low monthly cash flow causes a lot of financial stress and anxiety.
- There’s almost no money left.
- Debt can easily mount up and get worse when you are forced to borrow and spend more than you have.
In short, it’s no fun living like this. Breaking this cycle may not be easy, but it’s not impossible.
How to stop living from day to day (Core)
It takes a lot of work and strategy, but I think it’s worth it in the long run because I used to live day to day. About 7 years ago, I hated money and my relationship with finances. It seemed to me that no matter what I did and how hard I worked, I would never succeed.
My recent memory of financial adversity includes everything
- I wondered how I could stretch food for me and my son until the end of the week. I often went to food banks and the local soup kitchen that offered free hot meals every week.
- I look at the ground in the parking lot in front of my apartment to see if anyone has dropped off change so I can do my laundry.
- And the worst part is that I stay up at night wondering how I’m going to pay certain bills and expenses over the course of the month.
It’s been hard and at times discouraging, but I’m glad I finally have the knowledge and resources to move forward financially. I want to show you exactly what I did and help you in your process. The steps below are what I actually did, and hard lessons that took me a long time to learn. But first, let me tell you what the key ingredient is that you need to know or have in order to make this work: Cash flow. If you understand nothing else in this article, you need extra money to stop living hand to mouth. In other words: Your expenses must be less than your income. You need to back off a bit. If you constantly have to spend more than you earn or come close to it, you will have nothing left to save or grow financially and you will stop living from day to day. If your family is already in financial trouble, stay with me. I’ll show you a few ways to free up cash and generate more cash flow, but first you need to set that goal. Understand that it may take you a month to really improve your finances and get out of this cycle.
How do you stop living from paycheck to paycheck?
Make sure you follow this step-by-step process if you no longer want to live from paycheck to paycheck.
Step 1: Keeping track of your income and expenses
You may have heard this before and thought you could skip this step. Don’t miss it. It is very important that you keep track of your expenses and income. So many people (including myself) don’t know how much they spend or take home each month. Why would you need to know this information automatically? You’re not a computer or a robot. You’re a hard worker with a lot to do. Do yourself a favor and track your income and expenses each week. Sign up with Mint.com or Personal Capital, use a spreadsheet, download my budget templates or just use pen and paper. It doesn’t matter how you do it. Keep track of your measurements to get a clear picture of what is coming in and what is going out. You’ll soon have enough information to create a solid, realistic budget that you’ll stick to each month. If you need help creating a budget or improving your existing budget, check out my free budget guide here. Related: The budget plan is 50-30-20 : What is it and how does it work? My monthly budget as a single mom: Live and pay off $32,000 debt a year
Step 2: Withdrawn, withdrawn, withdrawn
Yeah, you knew that was coming. Next, you need to look at your expenses and cut back on them to free up more money. You may not be spending much anyway, but remember that your main goal right now is to create cash flow. Even if you are already reasonably frugal, ask yourself to make temporary sacrifices now so that you can change your life for good in the future. For example, one expense I really don’t need is a $55 a month gym membership. I like to go to the gym two or three times a week, and I find that a membership really pays off. But if I really had to cut back, I would cancel my gym membership immediately. I still have time to practice at home and watch videos on YouTube. An amount like $55 a month doesn’t sound like much, but that’s $660 a year.
See if you can continue your spending and ask yourself some of these questions
Can I cut back on my grocery and lunch budget? Even if it’s only $20-30? Do I really need to buy coffee for work? Can I take a break during the season and make coffee at home? Would my family be okay with us not going on vacation this year and instead going to my hometown? Should I buy them new? Can I buy it second hand or take it on credit? Do I really need this car? Can I choose a cheaper, less maintenance-friendly car? Can my partner and I share a car for a while? How can I get _____ for free? Continue the exercise by asking real and challenging questions to answer as you go through your budget line by line. Related: 50 daily expenses you don’t need to spend money on 70 ways to save more money while living from paycheck to paycheck
Step 3: Do not be afraid to use the resources and help available to you
Waiting for the next paycheck can be difficult and stressful, especially when you know you’ll never have enough for everything. If you haven’t already, spend the afternoon exploring the different programs and support options available to you. As someone who has used the manual, I can say that it is very useful when you really need it. I knew a lot of people who were too proud to get food stamps, but I didn’t have time to be proud. Instead, I went to my local aid office and got food stamps and asked for help with childcare. I was able to graduate, get an internship and really invest in my future. I soon had to give up welfare because I couldn’t do it anymore. At that point, however, I had a clear plan that helped me survive and thrive on my own. If you are in a situation where you do not qualify for government assistance, see if there are private resources that can help you. Local food banks can reduce your food costs. Utility assistance programs can help you pay your electric and gas bills within a few months. Nonprofits often run clothing closets where people can come and borrow clothes for their families for free. Or perhaps you have debts and one of your creditors is offering you a moratorium. Taking a break from student loans or other loans can help you get back on track and find more money to save.
Step 4: Commit to paying yourself first (tip: set aside your monthly income)
Paying yourself first is a good habit. When you get your paycheck, what do you do with your money right away? Do you pay your rent or mortgage? Paying bills or debts? Are you offering something nice? What if you paid yourself first? A fixed amount of money is transferred directly from your current account to a savings account. While most people put saving at the bottom of their priority list and put it on the back burner, it gives you a chance to stop living day to day. The reality is that if you think you’ll always save money when you have something left over at the end of the month, you’re almost always setting yourself up for failure. If you don’t value your money, it will somehow leave your checking account (probably in the form of additional unplanned expenses). Paying yourself first means making sure you put your needs and your future first, rather than putting something off until later. Even if it’s only $10, you feel good knowing all your money isn’t going to other people.
Start of maintenance process for previous month’s income
Another advantage of this approach is that it allows you to earn at least a monthly income. Why are you doing this? In fact, it’s the key to breaking this P2P cycle. If you want to stop being so dependent on your next paycheck, you need to have some savings so you can rely on the money you have. It could look like this. Let’s say you typically spend about $3,500 a month. To stop living from paycheck to paycheck, you need to save $3,500 to have enough money for an entire month without a paycheck. If you have this savings, you will save your earned income instead of spending it immediately. ***Please note that you have a monthly savings amount that you can spend and use as you see fit. Then the next month you can use the money from the previous month’s salary to cover your expenses. To repeat the cycle and to set aside the current month’s recipes for use in the next month. So now you have a whole new life cycle on your last month’s income. You can budget in a whole new way and know exactly what you have available each month. Most importantly, you no longer have to structure your life and your spending around your next paycheck. Related: Saving and paying off debts with irregular income
Step 5: Increase your main source of income
If you want to save better and pay yourself first, consider increasing your income. I know first hand that you can accomplish a lot on a limited income. Once you’ve cut out all the expenses you can spare, the next step is often to make more money. There are two main ways to do this:
- Ask your current employer for a raise or find a better paying job.
- Make extra money with side jobs or part-time work.
I’ll talk about option 2 later, but for now I want to focus on your main source of income (your full-time job), because that’s probably where you put the most time and energy. The best time to negotiate wage increases is in the middle of the year or at the end of the year, before January. Research the salary statistics for your specific position and realistically estimate how you can add or even increase the value of the company. Can you get additional training or certification that will allow the company to pay you more? Related: How to successfully negotiate a salary increase
Step 6: Stop using credit cards and loans
If you live paycheck to paycheck, chances are you don’t need to use credit cards or take out loans. At first glance, you may think you are doing the right thing by buying some goods for yourself and your family and stopping payments. It improves your credit score, right? Here’s the deal. Having debt can cut off your cash flow and leave you stuck in a P2P cycle. The money you save is used to pay off your car loan, personal loan and credit card debt. You don’t have to live like this forever. The solution is to set up an installment plan. Personally, I prefer high-interest debt to low-interest debt, such as mortgages and student loans. I think you can stop living from paycheck to paycheck and still have a mortgage or moderate student loans, but that’s just my opinion. But what really costs you money are interest and credit card fees. Check out some of the links and resources below to help you pay off your consumer debt quickly so you can put more money into savings and financial growth. Related: Staying motivated while paying off debts 4 books you need to read if you want to get rid of debt Which debts should you pay off first? Are debt settlement companies bad? The Debt Mindset Series: Avoiding the debt trap The Debt Mindset Series: The power of the sideline
Step 7: Higher income through fast-paying part-time jobs
Another good way to get a monthly salary early is to try a flexible or part-time side job that pays off quickly. When I was living from paycheck to paycheck, it was hard to earn extra at first because I was going to school and had to take care of my infant son. I couldn’t work at night, and sometimes the babysitters were unreliable. So I started working online and was able to make a few hundred dollars a month writing articles as a freelance writer. Other side jobs I found were working as a brand ambassador on the weekends for $20-25 an hour, and blogging and selling products online. Fast-paying jobs are usually jobs that pay the same day or next week. The idea is to make money quickly so you can reach your financial goals. Some of my favorite fast-paying side jobs are:
- Sell products online (eBay, Facebook Marketplace, Amazon and OfferUp are all good places to start).
- Food delivery via DoorDash or GrubHub
- Walking the dog
- Home Economics
- Freelance writing
- The work of the virtual assistant
- Pizza delivery
- Helping people to move around
- Cleaning the house
- Mowing the lawn
I encourage you to consider what interests you and what your current level of knowledge is. If you enjoy walking your dog, helping a business owner as a virtual assistant, or taking family portraits as a freelance photographer, choose an opportunity that provides you with a steady supplemental income that you can turn into savings. Related: Find a part-time job that suits you Side Hustles investigated: How do you become a freelance writer? How to become a virtual assistant from scratch (interview with a real assistant) 5 legitimate ways to earn an extra $1,000 a month 20 ways to make extra money today Simple and effortless ways to make money
Step 8: Use bonuses and winnings to your advantage
Finally, look out for bonuses and winnings during this process so you can use them to your advantage. The universe works in mysterious ways. If you start working hard on your budget, paying yourself first and maximizing your income, you can get bonuses, which I often call profits. Whether it’s a bonus at work, a tax refund, or a loan from a utility company, try to save all the money you receive so you can pay your bills and stop living off P2P. Read more: 7 smart things you can do with your tax refund
Living from paycheck to paycheck is hard. It is difficult to break the cycle. Choose your hard
I hope you found this guide useful. I don’t want to downplay the fact that it’s hard to live from paycheck to paycheck, and that all your efforts to make ends meet don’t go unnoticed. To quit the P2P life, it will also not be easy to start this process, but it will become easier with time. Start by creating a budget or adjusting an existing one. Use the resources available to you and take everything one step at a time, day at a time. Feel free to come back here and share your successes and success stories with me in the comments. I’m still keeping my fingers crossed for your financial success!
Stop worrying about money and take back control
Are you ready to take back control of your money? Take the first step with a free starter pack that includes:
- 2 templates for monthly billing schedules
- 1 Checklist: Start debt repayment
- 1 Checklist for radical cost reduction
Good luck! Please check your email now to confirm your registration.You know that feeling when you wake up in the morning and you have no idea how you’re going to pay your bills. Your phone is buzzing with bills to pay, and the pile of paper in front of you is growing by the minute. It can be quite nerve-wracking to have to deal with such a huge financial burden every month, which is why we invented credit cards and a personal savings account (ideally a 401k) to lessen the pain. But while a credit card can be a great help, it can also create a sense of helplessness and dependence if you aren’t careful. Here are some tips for making sure that credit card never becomes your biggest financial problem.. Read more about living paycheck to paycheck percentage and let us know what you think.
Frequently Asked Questions
What are the 8 steps to quit living paycheck to paycheck?
Most of us spend our lives dreading the day we have to start our job search again, and start living paycheck to paycheck again. Plus, there are no guarantees that you will get a new job, even though we all know that’s what life is: a constant search for a job. The point is, you’re spending your life living paycheck to paycheck, and it’s not sustainable. But, if you want to start living paycheck to paycheck, you have to start finding ways to stop living paycheck to paycheck, because doing so is the first step to financial freedom and true happiness. If you’re like most people, you’re living paycheck to paycheck. You’re likely stressed out about bills and you’re not saving money. But there are steps you can take to become financially secure. By taking the following steps, you can save money and become financially secure.
What is considered living paycheck to paycheck?
Unfortunately, most people do not have enough income to live off of throughout their entire life. The most common way to become “living paycheck to paycheck” is to start with a small amount of income and add to it slowly over time. Working additional hours is a good way to increase a person’s income, but it won’t always be possible to do so. There are numerous financial situations that can be considered to be “living paycheck to paycheck” and even more that are only close to living paycheck to paycheck. The following article will cover some of the more common situations and how to deal with them.
What is the 70 20 10 Rule money?
The 70/20/10 rule states that 70% of your savings should be invested in stocks, 20% in bonds, and 10% in cash. The rule also states that you want to rotate your investments so that your stock and bond investments change every three to five years. This rule is meant to help you automate some of your investments, but it’s not a set in stone rule. The 70/20/10 rule is a simple, time-tested guideline for creating your own financial independence. It takes the guesswork out of your money decisions by using a simple formula to determine how much you should spend on housing, transportation, food, entertainment, and retirement. The 70/20/10 rule is not a rigid rule, but rather an efficient way to figure out how much you can spend on your various expenses.
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