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Living Paycheck to Paycheck- How to Manage Your Money Better

When I did the latest reader poll here on Celebrating Financial Freedom a few months ago, the biggest problem most of you said you were facing is that you are living paycheck to paycheck.  It’s a problem that I see almost daily when readers contact me for financial advice.

Unfortunately, living paycheck to paycheck seems to be the norm for the average family, and the research backs this up.

Most people are living paycheck to paycheck not because they’ve experienced some kind of financial disaster that set them on their heels.  For the most part, the paycheck to paycheck life is caused by one of these two things:

  • You’re not making enough money

Most people fall into the latter category.

Read on and I’ll show you how to stop living paycheck to paycheck.  I’ll also hook you up with some resources to help you along the way.

Living Paycheck to Paycheck is Normal, Not Necessary

Now, the interesting thing is that most people who live paycheck to paycheck will tell you the reason they live that way is that they don’t make enough money.  However, that’s usually not the case.

In 2013, the median income per household in the US is $52,250.  Of course, that’s not a massive income, but it’s enough to get by comfortably if you manage your money well.  Yet I’ve seen people making six figures have trouble keeping the lights on.

I’ve also seen people with very little income stretch a dollar so far it would snap back and put their eye out if they weren’t careful.  But even with a low income they managed to stay out of debt and live within their means.  Sure, they live paycheck to paycheck, but they don’t have a ton of debt weighing them down, limiting their choices and freedom.

What’s the difference between these people?

It’s because one manages money well, and the other doesn’t.

 

Living Paycheck to Paycheck is Normal But Not Necessary- How to Manage Your Money Better  

 

Debt is Usually the Cause

For most people, living paycheck to paycheck is simply a consequence of how well (or unwell) they manage their money.

Most are in debt.

Most believe that debt is a necessary part of life.

And most are spending more than they make because of that debt.

 

So How Do You Stop the Paycheck to Paycheck Cycle?

There are several things you’ll need to do to get out of the paycheck to paycheck cycle for good.  The absolute first thing you have to do though, is change how you view debt.

 

Change Your View of Debt

Debt is a cancer to your finances that spreads over time and will completely take over if you let it.  Once you understand that all the interest and fees are causing you to spend 10%, 20%, even 30% more for your stuff, then you will have enough incentive to start changing your finances for good.

 

Manage Your Money Better

Once you change your perspective on debt, then it becomes a matter of changing the way you manage your money.  Most people who are living paycheck to paycheck don’t have a concrete plan when it comes to managing money.  They operate on more of a general idea of their finances instead of a clearly laid out plan.

This lack of organization is why the average family can’t seem to get ahead.

I’ll show you how to start putting together a solid financial plan below.

 

 

The Plan for Managing Your Money Better

Once you change how you view debt and understand that you have to have a plan for your money, then you can start your journey out of the paycheck to paycheck lifestyle.  Here are the necessary steps:

 

Evaluate Your Income

If you have a low income, it may be all you can do just to meet your immediate needs.  However, when you are proactive and have a plan for your money, you can at least avoid getting into debt and making your situation worse.

If you don’t have a low income, a good financial plan is just as important.  Actively managing your money allows you have a clear plan for every dollar so you don’t needlessly waste money.

 

Make a Budget

Doing a monthly budget is the key to stopping the paycheck to paycheck cycle.  Spending your money on paper before you spend it in the real world allows you to have complete control over your money.  Yeah, I know it doesn’t sound like a lot of fun.  But hey, living paycheck to paycheck is no picnic either!

You can find a list of my posts on budgeting here

Check out my easy to follow book on how to make a budget that works here

 

Make a Plan to Get Out of Debt

Once you start using a budget to get complete control of where your money goes, then you can start tackling debt.  Your goal should be to stop using debt and eliminate it for good.

Let’s face it, debt is the top reason that most people are living paycheck to paycheck.  Once you eliminate those credit card bills, car payments, and such from your life, it’s incredibly freeing!  You have more choices, your stress level goes down, and you have more peace because bills aren’t ruling your life

It’s very easy to make a workable get out of debt plan that you can stick to if you’re motivated.

Here’s how to get started with a solid get out of debt plan.

Here’s an even better way!

 

Keep Moving Forward

As you start budgeting and getting out of debt, it’s likely you will run into an obstacle or two along the way.  No matter what happens, keep moving forward with your plan.  You may feel like you’re making little or no progress at times when you’re leaving the paycheck to paycheck life behind.  But when you stick with it, use discipline, and relentlessly pursue your goal, you will come out on the other end smelling like a rose!

 

Living Paycheck to Paycheck is a Choice

Some people may disagree with me on this, but I believe that for the vast majority of people, living paycheck to paycheck is a choice.

For too long we’ve been convinced that debt is a necessary part of life!

For too long we’ve fallen prey to the marketing that tells us we should buy things we can’t afford!

It’s time to stop having limited options and less personal freedom because debt has kept us in bondage!

Now is the time to tell the paycheck to paycheck lifestyle to take a hike!

Now is the time to regain the freedom, the choices, and the money that the paycheck to paycheck life has taken from you!

Come on, you can do it!

Resources:

The CFF Online Get Out of Debt Course

Balance: The Quick and Easy Guide to Financial Stability Using a Budget

 

Ready to Get Serious About Getting Out of Debt?

Celebrating Financial Freedom Online Get Out of Debt CourseIf you’re seriously considering changing your financial life by getting out of debt, then you have to check out my free mini-course that will get you started on the right track.  It’s a shorter email version of my popular online get out of debt course.

In this 6 day mini-course, I’ll reveal the steps that my wife Angie and I took to stop struggling with money, get out of debt, and pay cash for things like cars and college tuition!  Best of all, it’s absolutely free!

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