living paycheck to paycheck

Living Paycheck To Paycheck: 5 Steps To Change Your Financial Future

Are you living paycheck to paycheck?

Don’t despair, the feelings of stress and anxiety that this financial position can bring is not something you are experiencing alone.

Recent studies have been conducted on people’s financial positions and it appears as though many workers are living in this manner.

A recent survey carried out by the First National Bank of Omaha concluded that nearly half of American adults are living paycheck to paycheck.

Another study carried out by the Royal Society of Arts (RSA) found that 7 out of 10 UK workers are chronically broke, meaning they are repeatedly reliant on their next paycheck to pay any upcoming expenses they may experience.

These are scary numbers and not something that should be taken lightly.

So, what’s happening, and why are so many of us in this position?

There are a number of reasons.

The cost of living is increasing faster than many people’s wages, many workers are crippled under student loans, and debts from credit cards or unexpected medical expenses are also taking their toll.

So how can you get yourself out from under the week to week, fortnight to fortnight, or month to month grind?

Here are some steps you should take.

1. Learn To Budget

One of the biggest problems most people face today is their inability to budget effectively. It’s one thing to write down a weekly or monthly budget, however, it’s another sticking to it.

A well planned out budget acts so that you are rarely surprised when an expense such as car registration or utility bill rolls in. If you are aware that these expenses are coming then you have time to prepare for them, this will help take the financial stress and pressure out of your life.

Developing a budget such as this may be the single biggest step you can take to relieving yourself from living paycheck to paycheck. It will also limit your temptations to overspend on products or services that you probably don’t need.

You can even get help from the Emma app, set budget by spending category and get push notifications when you are spending too fast to help you stay on track and cut down on wasteful expenses.

This leads us to our next step, cutting unnecessary spending.

2. Cut Back On Unnecessary Spending

Once you have developed a well thought out budget, it is time to take a look at any areas of your spending that simply aren’t necessary.

Cutting back on unnecessary spending will help to free up money that you may not have realised you had at your disposal. 

The challenge, to begin with, is breaking spending habits that you’ve built over many years. It can be really hard to check your bank, see extra cash sitting there, and avoid the temptation to go out and treat yourself to a fancy dinner or new piece of clothing.

Once you are able to break this cycle, however, you will soon see that having an emergency fund or a bit of extra cash stored away can really help to relieve some of that financial stress.

Start small if you must. 

Maybe put away $50 a week by spending less on your weekly grocery shop or by cutting any unnecessary subscriptions you may have. You can do that by connecting your bank accounts to Emma to get the full list of your bills & subscriptions.

Once you have the hang of that and are encouraged by your bank account balance slowly increasing, aim a little higher and increase that $50 to $70 or $80.

Before you know it you’ll have a few extra bucks to handle any future expenses that may come your way.

3. If You Can, Increase Your Income

There’s no doubt, this is easier said than done. However, it’s certainly not impossible, plus increasing your wage doesn’t necessarily mean you have to get a raise. 

There are simpler ways to bring a little extra cash into your household.

Perhaps you could consider working another job part-time, maybe you could pick up a side hustle online, or maybe even bring in a little extra cash by pursuing a hobby that you love. If that means upskilling and teaching yoga classes or instructing people at the gym then why not do that?

Getting yourself a side-hustle or part-time job doesn’t mean you have to do something you don’t want to.

4. Relieve Yourself Of Debt ASAP

Another big step towards relieving yourself from living paycheck to paycheck is eliminating debt from your life. Debt eats away at a portion of every paycheck you receive and can substantially limit your ability to save.

Sure, it’s obvious that paying off your debt faster is certainly going to help your financial position, in the long run, however, it is also important to note that resisting the urge to further adding to any debt is also very important.

For instance, if you have credit card debt and are aiming to pay it off, it’s extremely counterproductive to add to this by spending unnecessarily. It can be hard to resist the many spending temptations that surround us but if you are serious about controlling your outgoings then it is definitely an area of your budget you must tighten up on.

Maybe think about it like this, the faster you pay off your debt the sooner you can quit your second job.

5. Change Your Perspective On Money

The way you view your money can seriously affect your everyday spending decisions. For example, overestimating how far your next paycheck will go may lead to overspending. 

Another mistake many people also make is having a laid-back attitude to their spending habits. If you aren’t paying close attention to how you are using your money you may not be able to see where it is all vanishing too. 

Again, this is where a budget is so important. A budget will not only allow you to see where your money is being spent, but it will also give you insight as to where you can tighten up your spending.

Conclusion

There are many ways to pave your way to financial stability, whether that is living frugal, getting a better understanding of your spending or paying off debt to set yourself free.

Another great way to discontinue the cycle of living paycheck to paycheck is to employ the services of Emma.

Emma is a money management app that has been developed to assist you in freeing yourself up financially.

Emma will help you take control of your finances, keep your unnecessary purchases in check, and highlight any areas of your budget that you could be tightened up. 

The sooner you are able to do this, the sooner you can stop relying on your next payday.

Emma is available for download on both the App Store and Google Play Store.

Edouard Daunizeau

I look after all things Growth here at Emma. I come from France and have spent the last few years scaling consumer tech startups in the UK and beyond. 🚀