Tired of Living Paycheck to Paycheck? Here’s How to Break the Cycle

Introduction

Imagine it’s the 20th of the month, and you find your pockets empty. And suddenly, you start waiting for your next paycheck. The remaining 10 days you spend constantly worrying about reaching the salary date faster, and this is how you can not live your life financially relaxed. It makes your life a cycle of paycheck to paycheck, where you only spend days in financial stress.

This blog will suggest smart tips that can help you break the paycheck-to-paycheck cycle and live a financially relaxed life.

1. Find Out Where Your Money Goes

   Let’s start with the basics. Track every single penny of your salary. You can use apps like Notion, YNAB or a simple spreadsheet.

   
   

   Once you have identified where your money is going, split your money into basic categories according to your unique financial situation.

   Like,

   1. Monthly fixed needs (Rent, EMI, Utility Bills)

   2. Flexible Needs (Groceries, Fuel, etc.)

   3. Wants (Food deliveries, subscriptions, shopping)

   4. Savings/Investments

   If your wants are out of control and consuming money that can be put towards savings and investments, now is the time to reframe your financial behaviour and redirect your money towards a rewarding system.

   
   

2. Use the Dual Account System

   Split your income into two accounts.

   1. Salary Account (Use this account to receive your salary only)

   2. Expense Account (Use it for your daily and monthly expenses)

   
   

   When you receive your paycheck, consider transferring the total monthly expense into your expense account. Only keep your savings in your income account. This strategy would help you save money because your brain will only see the amount you have put into your expense account.

   
   

3. Prioritize Your Savings

   The main reason why you are living paycheck to paycheck is the lack of effort to save money. As soon as the salary is credited, you can prioritize transferring your monthly rent. It is subconsciously making your brain prioritize expenses more than savings.

   
   

   Prioritize savings and investments, and soon you will notice that your brain will start coming up with different ideas to save up money every month.

   
   

4. Build an emergency Fund

   An emergency fund helps you back up finances when you face emergencies in your life. It would save you from going into unnecessary debt or asking money from your relatives and friends.

   
   

   Automate savings by keeping a defined amount of money in your bank account at specific times. You can do it weekly, bi-weekly or monthly. Slowly and gradually, the small amount can be converted into a significantly large amount with consistency.

   
   

5. Stop Money Leaks

   The truth is, it is not required to earn more to be able to move.

   1. Cancel subscriptions that you barely use

   2. Stop impulse buying and start shopping mindfully

   3. Do not overstock monthly groceries

   4. Use electricity wisely

      
      

   These are some additional ways that can help you save money without controlling your lifestyle.

   
   

6. Increase Your Income with Side Hustles

   If you truly want to break the cycle of living paycheck to paycheck, you must grow your income. Increasing income intentionally means you do not just wait for a salary raise. Instead, you take active steps and create your income sources.

   
   

7. Pay off your Debts

   Personal loans and credit cards ease your life by supporting you in your emergencies. But the freedom of getting financial support comes with a responsibility to pay it on time.

   
   

   Snowball: Pay small debts first to motivate yourself by small achievements.

   Avalanche: Tackle the highest-interest debts first to ease your repayments.

Always keep aside the repayment amount every month, and once you completely pay off the debt, you can save or invest this money.

Conclusion

It’s not about the amount of money you earn per month; it’s about the way you utilize all your money. By mindful financial behaviour and prioritizing your savings, you can break the cycle of paycheck to paycheck and enter into your era of financial freedom.

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