How To Save When You’re Living Paycheck To Paycheck
It’s not the amount you earn that matters.
You’re about to receive your salary but you’ve already spent it all before it has hit your bank account or touched your hands. Every single coin has been budgeted for and no, you haven’t included things like vacations or luxury perfumes and handbags. If you can relate to this scenario then this article is for you.
Forbes published a report on the findings of a survey done by CareerBuilder. According to the results;
78% of people in America alone live paycheck to paycheck.
If you always feel like you don’t have enough money to cover all your bills then it is comforting to know that you are not alone. However, this doesn’t mean there’s nothing you can do to improve your situation.
If you have the dream of one day paying for the things you want without being worried about being kicked out of your house and living on the streets, then you need to make some tough decisions today. That starts with learning to save.
Below are ways you can save if you’re living paycheck to paycheck. It may seem impossible but you'd be surprised at what you can do if you set your mind to it.
1. Take a closer look at your budget
The fact that you’re barely making ends meet means that you have most likely already cut out things like Starbucks coffee or eating out several times a week so that advice won’t work.
However, if you take a closer look at your budget, you’ll find areas where you can save money. For example, you may realize that you’re buying expensive food or shopping for groceries at an expensive store.
It may hit you that you’re paying for both subscription television service and Wi-Fi yet you can do without one. You can then cut back on these expenses gradually. For example, ditch the subscription television service and watch everything online when you pay for Wi-Fi.
The most important things that should appear on your budget are food, shelter, utilities, school fees (if you have kids), and transportation. If you have some money left then this is where you fix your savings and anything else you really need, in order of importance.
If you exhaust your cash then at least you and your family won’t be sleeping on the streets or going hungry and a plus is that you’ll have some savings, no matter how little.
I know you may be surprised to see that I haven’t mentioned savings first because we’re normally told to pay ourselves first. As important as this is, if you’re living paycheck to paycheck then that can’t be your first priority because you can’t be kicked out of your house so you can save.
If you’re stuck on how to create a budget, this guide by Agatha, the creator of The Wealth Tribe Community will help you out.
2. Live below your means
This is probably the toughest advice to implement but it makes a significant difference.
Note that I didn’t say live within your means, I said below. The fact that you spend all the money you get means that your total expenses are the same amount or higher than your income. Therefore, you can’t have anything left.
When you live below your means, your expenses are lower than your income. Thus, you will have something to save.
If you’re wondering where to start, consider the essentials we mentioned in the above section; food, shelter, school fees, utilities, and transportation. Find out which areas you can cut back on, the more areas the better.
3. Start small
It’s normal to get excited about being able to save. However, refrain from setting crazy targets like saving $100 within the first month. I mean, you just started and you previously didn’t have anything to save so even if you make the suggested changes, you might not achieve the $100 immediately.
If you set a high target and you fail to achieve it, you may be discouraged from trying again.
So start small, it doesn’t matter if it is $10 or 30$ a month. What you’re doing, in the beginning, is training yourself to save. With time, saving will come more naturally to you and with more lifestyle changes, you’ll be able to achieve higher targets.
4. Start building an emergency fund
Think about this for a second. What would happen if you lost your job today? Would you be able to cover next month’s rent/mortage and your normal expenses?
Scary thought, right? The reality is that it happens especially now that we’re living in a pandemic.
Statistics show that approximately 114 million people became unemployed in 2020 alone due to the pandemic.
If it can happen to others, it can happen to you too. That’s why you need an emergency fund. This is the money you would use if you faced unexpected events in life such as losing your source of income.
If you’re wondering how much you should have in your emergency fund, you can start with an amount that can cover your expenses for a month. From there, increase that fund until you get to a point where you can comfortably pay your expenses for 3 to 6 months.
After you have your emergency fund set up then you can start saving for other things you want. You can even invest the savings but today we’ll stick to savings.
5. Pay off your debts
“When you get in debt you become a slave.” -Andrew Jackson
You can never truly feel free if you have debts hanging over your head.
The first thing you should do is refrain from taking on more debt. The focus should be on repaying the debt you’ve already accumulated. Try to pay off the interest rates on the debts so they don’t increase.
For a step-by-step process on how to pay off your debt when you’re surviving on a low income, read this article.
Once you’ve paid off your debts, the money you’ve been putting off monthly to settle these debts can be added to your savings.
6. Increase your sources of income/get a side hustle
Sometimes, you can’t save much no matter how much you reduce your expenses. In this case, the solution lies in increasing your income.
When was the last time you asked for a salary increment? Never? Or too long ago? Then this is the perfect time. After all, the worst that could happen is that your superiors can say no.
If you get the increment, it’s not the time to improve your lifestyle by moving to a more expensive house, or school for your kids or buying the latest car. The goal is to increase your savings. Saving more = investing more = affording the life you want.
If you can’t get a salary increment then consider starting a side hustle. There are numerous types of side hustles that can bring you money daily, weekly or monthly. Just find the one that suits your lifestyle since you still have your day job.
In Summary
Living paycheck to paycheck can make you feel helpless and like you don’t have control over your life. I’ve been through it and I wouldn’t wish it on anyone. The good news is that there are things you can do to turn the situation around. In the words of Martin Luther King, Jr, ‘You don’t have to see the whole staircase, just take the first step.’ Pick a step and START TODAY! You can sit down and look at your budget, explore various side hustles or look at how to cut costs. Slowly by slowly, you will build the savings ‘muscle’ and with time, live the life you’ve always wanted. I wish you all the best on your savings journey.
