Do you find it hard to save money as a low income earner?
Are you always living from paycheck to paycheck as a low income earner?
Everyday people all around the world are struggling to make ends meet.
According to a research from Charles Schwab, 59% of adults in USA are living from paycheck to paycheck. In a world reigning with opportunities and in a land regarded as the richest in the world. Living from paycheck to paycheck only means you are selling yourself short.
In this article, we will be discussing how to stop living from paycheck to paycheck as a low income earner.
Let’s dive in;
Definition of living from paycheck to paycheck
Living from paycheck to paycheck means you are living for the moment financially. This is a situation where you only have enough to cover your expenses for a week or less.
It is a phase where you are trapped in a cycle of working to survive or to pay off debt. Savings are not increasing and you cannot afford to invest in your retirement plans while living from paycheck to paycheck.
Reasons why you live paycheck to paycheck as a low income earner
- You are always piling up debt: When you pile up debt, you are likely to default on payment which can seriously damage your credit score.
- No plans for unexpected bills: You are putting too much bills on inessential items
- Prioritizing your wants over your needs: If you are too materialistic, you are likely to put your wants above your needs.
- Lack of financial education.
- You are undermining the importance of saving.
- You are staying stagnant at your current income
- You are overspending on liabilities.
- You are not attentive to your bank statement.
- You are buying too many gadgets instead of saving.
How to stop living from paycheck to paycheck as a low income earner
- Start something on the side that pays immediately: We live in a digital world with many online business and platforms. Many people desire to get things done in the fastest way possible. Pitch your services to this individuals and start increasing your income. One of the best ways to make extra money is to start a side job. There are many side hustles you can easily find such as, copywriting, freelance writing and editing jobs, web designing, social media managers and a lot more.
- Make a budget that prioritizes saving: A budget is a visual representation of all your past and current spending. It clearly shows you where you have been overspending and underspending. Living on a budget will help you control your expenses. A good amount of debt most individuals pile up is due to lifestyle inflation. One of the things you can do to stop living from paycheck to paycheck as a low income earner is to take full control of your total expenses.
- Take control of where your money is going: Create a spending plan that account for every dollar you make. Set aside some funds for fixed expenses like groceries, utilities, rent and transport. Also, separate some for savings, your initial savings might looks little but make up your to start and watch it grow.
- Reduce your spending: When it comes to making smart money decision as a low income earner, cutting down on your expenses is one of the most crucial things to do. Find out areas where you carelessly spend your money and cut them out by tracking your spending. If you are patient enough to track your spending patterns for a month, you should be able to identify the leaky areas and make some adjustments.
- Make effective and efficient lifestyle changes: Eat out less, opt for less expensive cars or choose to pay less rent. These changes will help you save more money. The more you reduce your expenses, the faster you can break free from paycheck to paycheck lifestyle.
- Stop piling up debt: If you keep piling up debt, it can end up sinking you into financial mess. Debt is one the tools that if used correctly can pave way to financial freedom for a low income earner. A lot of people do not know how to use debt in the right way. Getting out of debt will help anyone to stop living from paycheck to paycheck.
- Learn to control your desires for wants as a low income earner.
- Understand your spending habits: Take a look at your spending habits. It is essential for you to have a grasp of where your money is going and be able to track your expenses. When you start having a critical look on how you are spending your money, you will start sighting some loopholes that have been draining your money. Take action by getting rid of it as soon as possible.
- Limit your credit card usage: This is a tricky one because countless number of people will use their credit cards to purchase anything from mundane to lifestyle items. As convenient as credit cards are, people are not aware of the interest rate they are paying on those random purchases. To leave the paycheck to paycheck lifestyle as a low income earner, you have to limit your credit card usage because the debt just pile up fast.
- Automate your savings: Saving should be the first thing you set aside when you receive your weekly or monthly pay check. The moment you receive your paycheck, put aside a suitable percentage you can path with and put it into an interest earning savings account. Try and automate the process and see your savings account growing with ease.
In conclusion, as an enemy of financial freedom, living paycheck to paycheck as a low income earner can lead to serious consequences. Follow the tips above to stop living from paycheck to paycheck.
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