Financial freedom is getting more and more popular lately. Amidst the incertain pandemic, we have seen many people losing their jobs or facing situations like delayed salaries. Some even getting half of their salaries, as companies are on the verge of being shut. In this situation, we came across one question “How will you pay off your expenses if you missed a paycheck?”
Well if we consider the statistics in America people live in present and spend more on the present-day expenses than spending on investments or savings nearly 78 percent of American families used to depend on paychecks and were dependent on them. It is alarming that many people might be homeless if they did not change their spending patterns.
But luckily it is never late to change old patterns and step up your game with all-new ideology and strategies. It might be a tricky task to start with but once you get the hang of it, you will feel glad for the decisions you made. So, let’s start with your journey towards financial freedom.
Ways To Get Out Of This Paycheck To Paycheck Fiasco
Make A Budget
Making a budget can be a tricky task when you believe in spending in the present situation in paycheck to paycheck. The first step towards breaking this vicious cycle is to start planning and make a list of your day-to-day requirements. You need to be cautious about all the things that you are spending and whether we can deduct that expense. This will not only help you to allocate where you are spending but also you would be able to differentiate easily.
A good budget consists of all your monthly expenses be it the rent of your house or the money you spend on snacks and little things. You should make a budget that is comfortable to you and works with you don’t necessarily need to cut all your additional expenses but just reduce them up to some extent.
Also Read: How To Buy A House With Bad Credit Score: 8 Tips
There are various budgeting techniques like the reverse budgeting method or the envelope cash method or more than you can try whichever feels more comfortable and suitable as per your requirements.
Scale Down Your Expenses
It is necessary for your budget plan as selected by you to work if you reduce the additional expenses as much as possible. You should make a list of your needs and wants and plan your expenses accordingly, it is one smart way to reach financial freedom in the future.
Now that you started making essential payments and reduced paying extra, you can further make the smarter decision in choosing the right product or service to fulfill your essential demands like buying less expensive stationery items, spending less on fast food, and eat home-cooked meals more, start buying a product which is cheaper and does not affect the quality of the product, etc.
Raise Your Earnings
Now that you are well versed in allocating and regulating your money, you must think about enhancing your income. This step will help you improve your income status, you can pay off your debts, invest and save accordingly.
You can focus on more ways to earn more like you can start additional part-time jobs, work as a freelancer, can sell things that are no longer of your use, or even find a better-paying job as per your skills, etc. there are various ways to improve your current earning once you try to find them. It all depends on much hard work and time you can provide for this.
Saving For Uncertain Situations
It is important to play a step ahead and be prepared for uncertain events. As we can see the uncertain situation like the Covid situation, we needed to be prepared for the emergency funds as well and get health insurance as per requirement and suitability. These will act as a backup plan whenever needed.
Dispose Of Your Debts
Now that you have learned how to effectively save your money and raise your earnings with the additional job, as much as saving is necessary it is also necessary that you pay off all your debts and the interest as soon as possible. Payments for student loan debts, credit card payments, or any payment that is necessary to be made should be completed timely to stop the increasing interests in them as well as to stop worrying about them.
Well paying off your debts can be a complex task but there are ways to stop the process, first off, stop creating more debts to get yourself out of the debt spiral, make a list of all the debts that you currently have and start paying off your debts by using pay off method which will help you shortlist your debts as per the increasing interest rates. Utilize your additional income to pay off these debts one by one.
Why Is It Really Necessary To Break The Chain Of The Payment To Payment Cycle?
Financial Freedom leads you towards a stress-free life, you don’t to be anxious about your earning and what-ifs.
You Have Options
With better management of your money, you can have options and independence over your expenses. You will have ample opportunities when you learn how to save, invest and smart smartly.
You Can Fulfill Your Dreams
The reason you earn more is to make better decisions in life and save up to utilize them in the best way possible. After all, life is all about how you spend the moments, your saved earnings can help you with your expenses. If you plan to travel, you can fulfill your bucket list, it’s all up to you.
Break The Chain!
For the starter, you need to start first with managing your expenses. Trust me once you get started there’s no looking back. You eventually start liking the process. Like all the successful and wise people who spend their money, they focus on their spending and investments. They then take action wisely. It is about how you want to see your future. Don’t wait and start your progress towards financial independence and break the payment to payment cycle.