How to Stop Living Paycheck to Paycheck

10 easy steps you can start TODAY!

When a person lives paycheck to paycheck it means they need their next paycheck to pay their expenses. Said another way, it means they have little to no money left after they’ve spent their income. Financial challenges like this can quickly escalate into something that far surpasses dollars and cents, such as anxiety, depression, relationship problems, and job performance. The reality is it is easy to look financially healthy on the outside while the toll of financial stress can eat away at you on the inside.

So, how does one get out of this rat race? Here are 10 easy-to-follow steps. Before we jump in, let’s look at the math so we can keep things pretty simple. The equation is Income - Expenses = Profit. This means, to have more money after payday, you either have to increase your income, decrease your expenses, or both. Then, you take your profit and build your reserves starting with Savings. Increasing income can take time so let’s focus on the right side of the equation, Expenses.

These are things you can do today:

1. Write down your monthly income.
2. Under that, list your monthly bills and the amounts.
3. Pull out 2-3 month’s previous bank and credit card statements that have your everyday spending.
4. Go through your statements and identify every expense and purchase as a Need or a Want.
5. Total the amount of your Needs and your Wants. This helps you become aware of where your money goes.
6. Decide which expenses and purchases can be eliminated or minimized. Total this amount. This is your Opportunity Money. This is money you can potentially save. Bless it, meditate over it, sage it, etc.
7. From your Opportunity total, decide how much you can “pay yourself” every month. This is now a new monthly bill that must be paid just like your utilities and other bills.
8. Open or use an existing savings account that this bill will go into. Give this account a name, such as New Day or Emergency Fund.
9. Automate your savings bill either with payroll deduction or automatic transfer from your checking account.
10. Build your first $1,000, celebrate, and keep going!