61% of workers report that they always or usually live paycheck to paycheck to make ends meet, according to a CareerBuilder survey of more than 4,400 workers. This growing number may be due in large part to our ongoing recession, but according to the very same survey, that number was 43% in 2007. If you ask me, even that is still dangerously high. If you live this risky lifestyle, there are things you can do to rectify it. There are also things you should definitely avoid so you do not dig into a deeper financial hole.
Things You Should Do:
Save What You Can, When You Can
Even if you can only save a few dollars at a time, it will make a difference. You first goal should be to get ahead by one pay period. Think this sounds difficult? If you make $500 per week and are willing to save a measly two dollars per day, it will take just under nine months to save one pay period ahead. Two dollars per day is not very much money, especially if you make a lot of unnecessary purchases! Another place to stash money away is into your retirement account. One great way to do this is to set up an automatic withdrawal so that a small percentage of your paycheck goes into your retirement account; you will probably not even notice that this money isn’t going into your wallet yet the savings will really add up. The best perk of retirement savings is that contributions are tax-free on most accounts, so you’re saving money you would have otherwise paid to the government.
Scrutinize Every Penny
I do not care if it is a pack of gum, bottle of water, or a nail file. If I’m shelling out money for it, you’d better bet that I have thought long and hard about this purchase. I will not spend unnecessary money under any circumstance if I can help it. Whether you think you are guilty of this or not, try a test where you keep all of your receipts even if only for a week or two. Take just a few minutes each week to look over each and every purchase. You may well find some things that you really did not need in hindsight. Would that money back help you play “catch-up” on your paycheck to paycheck lifestyle? To help you scale back some of your purchases, you’ll need to be honest yourself when it comes to the difference between wants and needs.
The economy is still tough and will be for a while. If you are lucky enough to be working for a company that allows overtime (and you are eligible to get paid for it), take advantage. You can cry and whine about how the taxes are so much higher on overtime wages, but that money can and will help. Unfortunately, they have recently limited the overtime option at my workplace, and I have definitely noticed the lighter wallet!
Earn More Where You Can
In addition to (or instead of) working more, there are plenty of ways to earn more. You can start your own business that does not require much or any start-up money. You can get a second job. You can sell things online (or use your local classifieds). I could honestly list ways to earn more for a long, long time. But, for that, you can also check out any of these:
- 5 Easy Ways to Make Some Extra Cash
- How to Find and Manage a Second Job
- How I Started a Side Business for Extra Income
- 7 Ways to Make an Extra $1000/Month
You get the picture.
As I stated before, scrutinize every penny. Also, you need to be proactive and not only make a budget, but also stick to this budget. This way, it will be even easier to see where your money is goin and make any necessary adjustments to your spending habits.
Avoid Anything That Will “Nickel and Dime” You
Other banks’ ATM machines are famous for charging you $2-5 for every use. On top of that, your own bank may charge for that very same “convenience.” You could end up paying nearly $10 for a simple $20 withdrawal. Ridiculous. Really, any fees that can be avoided, should be! Do not pay late fees or “over the limit” fees on credit cards or other bills. Do not pay extra for non-essential airline extras. If you do not have to pay it, don’t.
Things You Should Not Do:
Do Not Use Credit
If you are living paycheck to paycheck, avoid credit at every turn. Do not carry a credit card. Buy anything you possibly can with cash. Individuals and families who live hand to mouth tend to use credit unwisely, thus creating debt that will lead to a financial disaster. Cut up your cards, and if you carry a balance of any kind, make a plan to pay off your debt immediately.
Do Not Buy “Stuff”
If you are in your home right now, I want you to look around. How much of what you just looked at do you now consider a waste of money? I used to waste all kinds of cash on DVDs, random equipment, and plenty of other “stuff” that I just did not need. I never even used a bunch of this junk! Nowadays, I’m happy to say that I am pleased with the few luxury items I actually do buy for myself. I wish I could say the same for my lady friend, but I’ll get to her eventually.
Do Not EVER Take Out a Payday Loan
There is no bigger scam around than payday loans. If you are unfamiliar, these are relatively small, short-term loans to allow people to “get by” for the time being. They usually carry extremely high interest rates, and even higher late and non-payment penalties. This is probably why they are illegal in 15 of the 50 states. Steer clear!
Do Not Borrow Money
If you have ever had to ask a friend or family member for help, you understand how difficult it is. There is nothing more humbling (some would call it humiliating) than to have to grovel because of poor planning. If it is a frequent occurrence, they may even start to think less of you. Try your best to avoid having to borrow money from family or friends at all costs. Plan ahead so that if any emergencies do happen,it will not be nearly as hard to handle if you have an emergency fund set aside.
There is definitely more that you can do to avoid the paycheck to paycheck ditch, but the moral is that the more prepared and fiscally responsible you are, the less damage you will endure when all is said and done. Have you escaped the never-ending cycle of living paycheck to paycheck? Do you have any additional tips for those of us who are trying to lead financially less stressful lives?
(photo credit: Shutterstock)