Living paycheck to paycheck is not just a malady of the working poor. Those who have higher incomes are often just as guilty. This is because many people spend as much as they earn; when their salaries increase, so does the amount of money they spend every month.
Those living paycheck to paycheck while earning six figures are hard to feel sorry for since it seems there isn’t much of an excuse. Unlike the working poor, who often call upon online installment loans for individuals because they aren’t earning a decent wage, those with cushy salaries but strapped for cash simply need to improve their personal finances. The way to do that is as follows:
Step one is resisting the urge to match lifestyle with earnings dollar for dollar. Just because it’s now possible to buy a bigger house or second car doesn’t mean you should follow through. Stick to going out only one night a week, like you did when you earned much less. The easiest thing to do is simply keep your lifestyle the same despite a boost in income. Take steps to further live below your means and only upgrade when it makes sense.
The next step is to deposit an initial amount in an account that is not easily accessible, such as an online bank. The next step is to examine your bills and find areas where you can save money. Next, develop another means of creating income that you can enjoy so it will not feel like another job. Finally, keep up the momentum, and, before you know it, you will have saved a fair amount of money without changing your lifestyle or feeling deprived in order to do it.
Another alternative is reducing debt by following a few simple techniques. Look around your home and find items that you no longer need or want, and sell them. Yard sales, eBay and Craigslist are popular methods to raise cash. If you receive a tax refund, apply it to your debt. Transfer balances to an interest-free credit card and try to pay it off, or down, during the “no-interest” period. If your children are now self-sufficient, and your spouse can maintain his or her livelihood, consider cashing in your life insurance and applying it to your debt.
Living within your means is still the primary goal once getting finances in order is achieved. There should be enough latitude for you to be comfortable in case of unforeseen circumstances. One of the biggest culprits is the habit of immediate gratification. Easy access to credit traps you into purchasing more than you can reasonably afford.
Set a budget and stick to it. Review it periodically to make sure you are still on track. Pay attention to where your money goes. If you spend haphazardly, you will not be able to see problems on the horizon, and they will overwhelm you before you realize it. Paying in cash helps you stay on budget. This takes a major commitment because it is too easy to pull out a credit card when you are at the point of sale and discover you do not have enough cash. This is a perfect time to ask, “Do I really need or want this?” Be critically aware of the actual cost of charged items. Verbalize how much you are actually paying for the items you charge, even sale items.
The more you earn, the more you spend. Unfortunately, that is an accepted practice in our society. Your personal finances should be paramount in your overall economic plan. Shopping is a landmine to be navigated. Make a list and stick to it, compare prices before buying large ticket items, find areas that you can cut out, or cut down, and resist the urge to splurge as much as possible.