Tips to Help You Stop Living Paycheque-to-Paycheque
Living paycheque-to-paycheque can be very stressful. If you’re spending all the money you earn every month, it becomes very difficult to juggle your expenses. Having to worry about every dollar you spend and being unsure if you’ll be able to pay for everything you need can cause a lot of anxiety and worry. Even worse, when you’re living paycheque-to-paycheque, any unexpected expenses or financial setbacks can leave you short on cash and needing to take on debt.
However, many Canadians live paycheque-to-paycheque. A survey by the Canadian Payroll Association found that that 47 per cent of respondents would have difficulty meeting their financial obligations if their paycheque was delayed by even a single week.
If you’re in this situation, it can feel like a cycle that you can’t escape. However, there are things you can do to help. Here are some tips that can help you stop living paycheque-to-paycheque.
Track Your Spending
How many times have you got to the end of the month and thought “Where did my money go?” It happens to a lot of people. The problem is that spending is easy and little things add up. This is especially true if you’re shopping with your credit card. It’s very easy to tap and swipe when you’re making a purchase, and that makes it very easy to overspend. Plus, since you don’t have to count out physical cash, it’s easy to forget how much something cost.
The solution is to track your spending. Whenever you spend any money, take note of the cost and the details of the purchase somehow. You might want to use the notes app on your phone, an app designed to track spending, a spreadsheet on your computer, a pen and paper, or any other method that works for you. Try to write down your purchases shortly after making them so you don’t forget any.
Once you’ve tracked your spending for a while, look at where your money is going. Is there anything that sticks out? Are there any areas where you could make cuts? Once you know where your money is going, it’s a lot easier to find potential savings.
Automate Your Savings
Most financial institutions let you automatically transfer money from one account to another on a set schedule. This can be great for building up your savings.
One way to automate is to set it up so a certain amount automatically moves from your chequing account to your savings whenever you get paid. If the process happens automatically, you’ll soon forget about it and you likely won’t even miss the money. Over time, the money in your savings account will grow. You can then use this money as your emergency fund.
Having an emergency fund is critical and a big help when you’re living paycheque-to-paycheque. Life is unpredictable and unexpected costs come up. For example, your car could break down and you’ll need to pay for a sudden repair. If you have money in your emergency savings account, you won’t need to go into debt to make the payment. Knowing you have some money to help you in an emergency can relieve a lot of stress.
To figure out how much you should move, you’ll need to look at your spending. Figure out how much you need to afford all your monthly costs and, therefore, how much you can afford to put into savings. Even if you’re only able to save a small amount each month, that’s fine. Having some savings is much better than having no savings at all.
Most experts recommend having at least three months of expenses saved in your emergency fund, but saving this amount takes time. You’re not expected to save this much all at once. Start small, grow your savings each month, and soon you’ll have a cushion. This extra savings will help you break the cycle of living paycheque-to-paycheque.
Look at your Subscriptions
A lot of people pay for several subscription services every month. From memberships to streaming services to anything else you pay monthly, these costs add up. That’s why it’s a good idea to sit down, look at your bills, and figure out how much you’re spending on various services. There’s a good chance these subscriptions are costing you more than you expected.
Once you know what you’re spending your money on, think about whether these costs are worth it. For example, if you’re paying for a movie or music service (such as Netflix, Spotify, Apple Music, etc.) are you actually using the service? And, if you are using it, are you using it enough to justify the cost? Most subscriptions can be stopped temporarily, so you can unsubscribe for a few months and see if you miss the service. This can be a good way to save some money every month. The money you save can be put towards your savings and having savings is the way to stop living paycheque-to-paycheque.