«   |   »

How Young Families Can Move Past the Living Paycheck-to-Paycheck Phase

When first starting out, many families get in over their heads, in their rush to buy a home and get established. This often results in a lack of savings for emergencies and living “paycheck to paycheck”.

When you live paycheck to paycheck, it can seem like you are struggling to get by. You may regularly wonder what would happen if you got severely sick or seriously injured. Financial concerns may keep you up at night, and you may not feel like you can afford to take a vacation or even a random day off when you feel run down. If you are tired of living this type of lifestyle, there are a few steps that you can take.

Analyze Your Budget

In many cases, those who are living paycheck to paycheck have expenses that are very close to their regular income. They simply have very little wiggle room in their budget to save money, to pay down debt or to deal with unexpected expenses. You may be able to get a second job to earn more money, but a better idea may be to understand your budget and focus on living beneath your means rather than right at your means. Once you know where all your money is going you can work on finding places to trim.

Reduce Your Utilities Expense

If you feel as though you are spending every penny you earn, this is a definite sign that you should reduce your expenses. While you could cut back on entertainment expenses, clothing and other miscellaneous items that affect your quality of life and lifestyle, another idea is to focus on your recurring expenses. For example, you can repair or maintain your HVAC system to reduce energy consumption. An HVAC tuneup offers the ideal opportunity to identify a minor issue that has the potential to become a major problem. Without regular upkeep, your system could require costly repairs long before its expiration date. One of the main benefits of an HVAC tune-up is that it helps your system operate as efficiently as possible. Lubricating the moving parts, checking the refrigerant levels, cleaning the condenser coil, etc. keeps your HVAC system running smoothly on as little energy as possible.

You could also readjust the settings on your thermostat.

Consider Downsizing

Another excellent way to reduce recurring expenses is to downsize. This could include sharing one car for the whole family or even moving into a smaller home. These steps could each save you hundreds (or even thousands) of dollars a month. When you have this substantial amount of wiggle room in your budget, you may feel as though your entire financial situation has changed.

Save and Invest Money Regularly

These steps can all help you to gain better control over your budget now. However, if you are serious about not living paycheck to paycheck, you need to have money in the bank. Ideally, you will have at least six months’ worth of expenses in your savings account. You can also invest in income-producing investments, such as dividend stocks. As your balances for these assets grow, they will generate even more income for you over time.

As you can see, the steps associated with overcoming a paycheck to paycheck lifestyle are not as complicated as you might think. You can begin working on these steps today and make regular progress going forward. Over time, you will notice your financial stress gradually being reduced.

You might also like: