Resolution #4 – Stop Living Paycheck to Paycheck
Published on 1/4/2020
4 Ways to Stop Living Paycheck to PaycheckMore than half of Americans (57%) have fewer than $1,000 in savings. That means just one unexpected emergency could easily cause long-term financial damage. To break this cycle, the first step is to figure out where your money is going and then find ways to cut expenses or earn more. Here are four ideas to help you get started on a path to fiscal fitness.
STEP 1: Track your spending. The most common cause of living paycheck-to-paycheck is not keeping track of spending. For one month, track every single purchase and bill, whether you use your checking account, credit card or cash. At the end of the month, you’ll have a good baseline from which to develop a realistic monthly budget, and you’ll clearly see where you’re overspending or can make cuts. Orlando Credit Union offers an online budgeting tool, Money Management, which can help you get your handle on spending.
STEP 2: Take a hard look at your fixed expenses. Sometimes a paycheck-to-paycheck existence is a wake-up call that you’ve locked yourself into a lifestyle you can’t really afford. For example, your monthly housing expenses should be 28% or less of your monthly gross (before taxes) income. If you’re paying more, you may want to consider moving to a less expensive neighborhood, downsizing or finding a roommate.
STEP 3: Organize your bills. FileThis is a great app to keep track of all of your bills and account statements in one easily accessible place. Just link your FileThis account with all of your online accounts to get a complete overview of each account, download account statements and receive automatic bill due date alerts. The app keeps track of your account statements from the past three years and downloads new statements as they become available. Most online accounts can be synced with FileThis, including your credit union accounts, retirement, health and auto insurance, utilities, entertainment and retail.
Starting small can build into a savings safety net. If you can cut your expenses by just $100 a month, you can save $1,200 a year, which would cover emergency car expenses or an unexpected trip to the emergency room or veterinarian. With time, your new and improved spending plan will provide you with long-term financial stability.