Millennial Corner: Stop Living Paycheck to Paycheck

financial-edOnce, the phrase “living paycheck to paycheck” only applied to those in low-wage jobs with little opportunity. But now, a lot of us are swimming in debt despite holding down a good job.

Being stuck living paycheck to paycheck can take its toll. You know you have expenses to pay, but just having some cash left over at the end of the month would be nice. I learned a while back, this is no way to live.

To break out of the rut, I developed this 4-point plan to live by and help me save.

1 – Track Spending

We all share the reality of everyday expenses and bills to pay each month.  Everything from necessities such as housing and utility bills to buying lunch at work, dinner out, or new clothes (you know, the “fun” stuff ).

With so much going on day-to-day, we may not be paying close enough attention to how these expenses—especially the little extras—wiggle their way in and impact our bottom line.

The way to track it all is to set a budget and stick to it.

If budgeting has always been difficult for you, it may help to look at it from a different perspective. Some people swear by spreadsheet budgeting. Others prefer just tracking their expenses. It might help to just jot down goals for the money in your savings account. The key is to get very specific.

2 – Make Reasonable Savings Goals

A practical savings plan should be based on long-term and short-term goals. Priorities and goals many strive for are for things like: getting out of debt, saving for retirement or saving for a new home.

Maybe your short-term goal is to take a vacation next year and your long-term goal is to buy a house. After naming your savings goals, it makes sense to allocate funds from your paycheck to a savings account so you’ll never see the money or miss it. Maybe you can save 10 percent of your earnings toward meeting your vacation or home goals.

One important budget item that is often overlooked is an emergency fund. If your car conked out tomorrow, would you be able to pay for thousands of dollars in repairs or replacing it altogether? Or, if your spouse suddenly came down with a long-term illness and couldn’t work for several months, would you still be able to keep up with your bills? Make sure your plan covers for these types of situations.

3– Cut the waste

The smartest way to begin to reach these goals is to go through your spending and look for items that don’t fit your values and priorities. Stop spending every dollar you get on those items. You’ll learn like I did that this trims the waste spending. Some ideas might be:

  • Reduce impulse buying
  • Learn to cook
  • Cut the cord on cable TV
  • Bag your lunch
  • Drive a used car
  • More ideas

4– Don’t rely on one income stream

Don’t have a side job? If you’re living paycheck to paycheck, it might be time to get one. In the new gig-economy, it’s simple to start earning an additional income stream from a passion or skill.

A small side business can be a great way to earn extra income. From home you could sell items around your house that you’re no longer using, like appliances or clothes.

If on-demand work is more your thing, Uber and TaskRabbit are common side hustles. Your choices might include a part-time job or freelance work. Here’s a list of some of the top gig jobs.

Resources: Quicken Inc., Money Talks News, MyFinance, Inc.