Living paycheck-to-paycheck? Learn three effective strategies to save money and gain financial stability.
TL;DR: Discover three effective strategies to break free from the paycheck-to-paycheck cycle and gain financial stability. Make yourself a priority, automate your savings, and master the art of thriving on less. Start your journey to a brighter financial future today! đź’°đź’ˇ
Hey Gang,
Have you ever wondered what it means to live paycheck to paycheck? It’s a financial situation where people find themselves relying solely on each paycheck to cover their day-to-day expenses, often with little to no savings left over. In other words, there’s barely any financial cushion to fall back on in case of emergencies or unexpected expenses.
And it’s more common than you can imagine. According to a recent survey from CNBC, about 58% of Americans live from paycheck to paycheck. That’s more than half of the population dealing with stress, constantly worrying about making ends meet, and having limited opportunities to save for the future. You can break that cycle, however.
Throughout this edition, we’ll explore practical tips to build savings even when living paycheck to paycheck, such as:
🫵Making yourself a priority
🤖Automating your savings
🧮Living below your means
Let’s begin!
It’s Okay To Put Yourself First…
The bills and the expenses never seem to go away. That’s why, if you’re living from paycheck to paycheck, you often find that you may be barely breaking even after you’ve sorted out those expenses. But bills aren’t the problem; instead, there’s probably something you’re doing with your money, that you shouldn’t.
It could be you eating out, rather than making your dinner– and while it may seem like you are treating yourself, going out to eat is costing you the opportunity to save. That extra buck could instead go into your Roth IRA account, which will benefit future you immensely.
So? Make yourself a number 1 priority, and that goes beyond immediate gratification sometimes. Think more in line with what you can do to meet your financial goals, from cutting down on certain expenses to making a sacrifice here and there.
Get Your Savings on Autopilot
Life never stops, and you’ve got to keep up with it. Unfortunately, that may mean you face the difficulty of remembering that you have to set some money aside. Thankfully, we live in a world where you can automate the saving process— as soon as the money hits your account, a preset portion is deducted and put into your savings.
Depending on your income, you can set any portion of your cash inflow for this purpose. But if you’re still not sure what percentage you should work with, you can begin with the 50/30/20 formula.
That is; 50% of your income for obligations
30% for your wants
20% for your savings
If you’re not sure where to save, a Roth IRA account is a pretty solid destination, as it can hold not just investments, but cash as well.
Money saved into Roth IRA accounts can be withdrawn without penalties or taxes, once you the account has been opened for five years and you are 59½ years old.
Master the Art of Thriving on Less
Up next, you’re going to need to start asking yourself the “wants or needs” question. Every time the opportunity to spend money comes up, ask yourself—- do I need this? Or do I want it? Is it a want, or is it a need?
Doing so helps you get clear on what you can’t do without, and what you can pass up on. And then you can make some serious financial progress. Setting up a budget is also a fantastic step to help build a better saving habit. You can set an amount for food and other groceries, something for non-perishables (like cleaning materials and toiletries)
⛓️Break the Paycheck-to-Paycheck Cycle
Developing new saving habits sets you on the path to financial freedom. There’s also the fact that you derive pleasure from building your wealth, as opposed to spending it.
It’s one of the most effective measures for eliminating financial fear, a phenomenon that leads people to unnecessary spending. By exploring these tips, you’ve taken a significant step to break free from the paycheck-to-paycheck cycle.
Start today! Take the first step towards financial freedom by implementing one key strategy you’ve learned from this newsletter. Whether it’s automating your savings, living below your means, or making a few sacrifices for your future benefit, commit to making a positive change. Your financial well-being is worth it!
