It seems these days, so many families are just getting by and creating more and more debt – instead of saving money for their future. With inflation and the rising costs of gas and other necessities, how can families – especially single moms (or single income families) stop living paycheck to paycheck and start saving money for a better future? As a single mom for most of my adult life, I can totally relate to this topic. It seemed that most of the time, my paychecks were spent well before I deposited them into the bank and there was absolutely NONE left to put towards savings. The reality is that although the cost of living (like really basic expenses) is getting more expensive, there are many things that we spend money on that we don't absolutely need. Learning to cut out just a few of these and negotiate prices on certain other things, we can stop living paycheck to paycheck, pay down debt, and begin saving for a better future.
Lazy hands make for poverty, but diligent hands bring wealth
Proverbs 10:4 NIV
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How to Stop Living Paycheck to Paycheck
Spoiler Alert – This post, while meant to help you, WILL call you out on your habits and the real reason you have no money! If reading it strikes a nerve, then you are exactly who I'm talking to and you should probably start taking notes! If you are a mom with children, you definitely need to take this post to heart so that you can not only create a better life for your kids, but you are also responsible for teaching them to be responsible adults one day and to break the cycle of poverty you are currently in.
Throughout my military career and after leaving service, I've worked with many people trying to dig themselves out of debt. Most of the time they tell me they just don't make enough money to pay their bills, resulting in higher credit card debt (paying bills with credit cards) or bills just not getting paid. Nine times out of ten, if I stalk their Facebook pages, I can see exactly why they don't have enough to cover their bills. The reality is that we've come to live well outside of our means simply because we think we need things that really aren't absolutely necessary. My favorite “call out” is when I'm talking to someone and they tell me how broke they are and they just can't seem to get a break – yet they are sucking down a Venti Frappuccino from Starbucks. No offense to Starbucks because I do love me some java – but you can't tell you are broke when you obviously have the money to indulge!
#1. Check (and monitor) your credit score
You may be thinking “I'm not applying for a loan so what does my credit score matter?” The truth is that your credit score impacts much more than your ability to obtain a loan! A poor credit score can impact your insurance rates, employment opportunities (employers often check credit scores these days even if you aren't handling money), your ability to get approved for an apartment, and so much more. Aside from the impact of your credit score, it is so important in this digital age that you keep tabs on your credit report to make sure your identity hasn't been compromised (I've had mine compromised more than once!). Hackers are getting better and better at stealing your data and opening accounts in your name (and not paying the balance) among other things that can impact your credit rating. This may not be important to you now (although it should be), but someday down the road you may be in a position (financially) to want to buy a house or even buy a car. It is better to find out issues with your credit report before you need to use it for something! You can check it completely free with Credit Sesame (you won't need to enter credit card data to get this free report).
#2 Develop a budget & cut the fat
I can't stress enough how important it is to have an actual budget – not one that is in your head, but one that is written down! You must go through your bank statement and write down every single transaction for the month and sort through what is absolutely a necessity (bills for your house/utilities/car payments/etc), and what other things you are spending money on that can be minimized or done away with completely.
Many of your household bills can be adjusted by either calling and negotiating or switching to a new provider. Shop around for the best rates for your phone, internet, cable, insurance, etc. You can almost always get your current provider to drop your monthly payment or find a better rate elsewhere. Stop paying extra when you can get it cheaper somewhere else!
- Electricity bill – Power to Choose is a great place to see where you can get a better deal on your electricity rates. Onc you have 12 months of history, you can also arrange to have your payments spread out to be the same each month based on your usage history.
- Cable/Phone/Internet – Always shop around to see who can offer you the best package deal. Many companies will give huge discounts when you package all three with them. Also, be sure to call them once a year to see if new (cheaper) packages are being offered. My mom had the same package she got when she first signed up like 8 years ago. We called and got her bill cut in half with more stuff on the plan because their plans had changed!
- Home/Auto/Life Insurance – This is one that many people never do! Every year you should be checking to see if you can get a better rate from another company. Many things go into how much your rate will be – credit score, age, family status, past accidents, etc. Always shop around to find the best rates, keeping in mind that most often you will get the best rate when you combine all three with the same provider.
- Student Loans – Check out options for refinancing your student loan to get a lower payment or to pay it off quicker. Credible is a great way to find the best refinancing options!
There are going to be MANY things that you've been spending money on that are not an absolute necessity. What is NOT considered necessary?
- Starbucks or other made-for-you coffee is NOT a necessity! I didn't say the coffee wasn't required but you can invest in a Keurig instead and you'll pay for it in like 3 missed Starbuck visits! Plus, you can order the pods in your favorite brand/flavor and have them auto-delivered to get additional savings.
- Eating out is not considered a necessity. There have been a few months recently where I thought we were missing money at the end of the month. I'll be honest, I get totally caught up in my blog work that I forget to set something out for dinner. It is so much easier just to go pick something up. While it may be fun, taking a little time to prepare meals is not only cheaper but is much healthier. I invested in an InstaPost and during my morning routine of tidying up the house and feeding the dogs, I toss the ingredients in and forget about it until dinner time! If you do enjoy cooking but just don't know what to cook, you might want to check out $5 Meal Plans which will provide you with a variety of meal ideas along with the actual shopping list and instructions to make it! Stop spending money on lunch at work and take leftovers!
- Watching a movie when it comes out at theaters is not a necessity! While you may want to indulge once in a while, wait until the movie comes out at Redbox. You'll spend less on the movie itself, plus the money you would end up spending on snacks.
If you need help with how to set up your budget, check out this post from some of my fellow Girl Boss Bloggers:
Yes, all this takes a little effort on your part to actually do the research and make the calls, but if you are serious about getting yourself out of debt and to stop living paycheck to paycheck, then you need to do it! If you think this requires too much work on your part, then you really aren't serious about getting out of debt and improving your situation!If you aren't willing to put in the effort towards improving your situation, then quit complaining about your situation!Click To Tweet
#3 Smart Shopping
Once you get your budget set up and know how much money you have to spend on things like groceries, gas, and other things, you can maximize that money by using the cash system AND savings apps.
- Savings Apps – Instead of clipping coupons (because who has time for that?) always use the Ibotta app. This app works sort of like a coupon, but instead of giving you a discount, it pays you! You earn cash back on a variety of items from many different stores. And unlike most coupons, there is a wide selection of products/brands to choose from – but you can double up and use a coupon with your purchase AND earn the cash back with the Ibotta app. You can request payment of your earnings by either PayPal or on a gift card to a variety of different stores. Sign up for Ibotta today and get a $10 welcome bonus!
- For online shopping, Ebates is a must! I still can't understand why everyone isn't using it! You are already shopping online so why not earn cash back while you are there? Seriously! You are throwing money away by not using Ebates for every online purchase you make! Read more about how to use Ebates and get to earning that cash back!! My favorite savings hack is to order almost everything online. I shop primarily at Walmart for our groceries and toiletries. I can order it online, use Ebates for the cash back, then just go pick it up without having to spend an hour at the store. (And you can still use the Ibotta app to score cash back with your receipt on top of your Ebates cash back). I also do this for the pet supplies I get at PetSmart. When shopping online, always see if they offer a “ship to store” option because then you don't pay shipping costs.
- Cash System – I use an edited version of the cash wallet system because most of my bills are automatically paid online. For things like my grocery, gas, and entertainment allowance for the month, I put that amount (in cash) in an envelope. I have an envelope for each category, and once I've spent it, that is it for the month. This is why it is super important to always create a shopping list when buying groceries and only buy what is on the list! (This is where that $5 Meal Plan subscription really helps!) Knowing exactly how much I have to spend on entertainment helps me to plan out specific family activities. If we want to do something that is more than our monthly budget, we will save a portion of the monthly amount to be able to afford the more expensive thing the next month (or later in the year). Any money left over from the budget is simply added to the following month to allow for emergencies or unexpected events.
- Clothing – Stop buying into the idea that you have to have the latest fashions hot off the rack. Seriously! Why are you paying for name brand stuff at full price just so you can have the newest look? That is just dumb! And this is especially so when it comes to kids and teenagers. They grow out of clothes so fast that it isn't worth it to always buy new. My teen daughter and I are quite happy shopping at second-hand stores such as Plato's Closet or Threads. For smaller kids, you can find amazing deals (and get rid of the clothes they've outgrown) at shops like Once Upon a Child.
**The key to staying on budget is to not have to have everything right now. Learning to do without to have something better (at a later date) is something that must be practiced. Look for things to do that don't cost money like going to the park or beach. And moms – it is completely OK to tell your kids “NO!” By not setting (financial) boundaries, you are setting them up for failure when they become adults.
#4 Stay on budget regardless of pay increases
This is where so many people fail miserably!! Anytime they get a pay increase at work or maybe get a new job that pays more, they feel it necessary to raise their cost of living. Instead of spending that extra money, put it to savings or to paying off any debt you may have. Learn to live at the level you are now and as you begin to make more and more money, you won't fall back into this cycle of living outside your means. Plus, if you continually increase your cost/standard of living, you will be in a bigger mess should you lose that job because life does happen! I get a check from the VA for my disability and my fiance works for the federal government. We both get a small pay raise each January. As soon as the first checks are deposited with the higher amounts, I set up an auto transfer to our savings for the amount of the increase. We never see that money so we don't miss it.
#5 Open savings account in a separate bank (makes it harder to access)
I learned this trick when trying to teach my son about saving money. He is 20 and has been working since he was 16 and has his own bank account. We had set up for money to automatically go to his savings each payday (like half of his check because he lives at home and has minimal bills). One day I asked him how much he had in savings and was speechless when I saw that he had been transferring money back into his checking (from the savings) to feed his Taco Bell addiction! He has the banking app on his phone so it was just too easy for him to transfer the money when he “needed” it. I made him open a new savings account at a local bank and have his savings automatically sent there. He doesn't have that banking app on his phone and he intentionally did not get a debit card for it. If he wants to get money from that account, he has to physically drive to the bank to make a withdrawal. He now has a significant amount growing in that account! Make it a hassle to get to your savings so you will be less inclined to touch it.
Ideally, you want to pay yourself 10% of your, but as you are trying to get your finances under control this may not yet be an option. If you can manage to schedule even just $5 from each paycheck, that is a start and you increase that amount when you are able to. Don't put off beginning to pay yourself until you've reached some magic income amount. Start small and grow from there.
#6 Passive Savings
- 401K Plans -This is one that many (especially younger) people shy away from. Many companies offer the option to contribute to a 401K. You can set it to send a set percentage of your earnings each payday to a retirement account. I can't stress how important this is for the younger generation. Start small – like 1% of your pay (which your employer typically will match). This adds up over the course of your life and it is taken out before you see your paycheck so you won't miss it. If you don't start paying yourself, you will end up struggling far beyond your ability to work and earn a wage.
- Investments – I started using this app called Acorns earlier this year. I know absolutely nothing about investing but knew I needed to start venturing into something beyond my savings account. With the Acorns app, you connect your bank account to the app and each time you make a purchase with the connected card, it will round up the amount and deposit it into your investment account. For example, if you paid for gas and it came to $45.64, you would have 36 cents deposited into your Acorns account. This isn't a huge investment, but over time (and depending on how much you use your card) it will add up! You can also set up an automatic deposit to the account on top of the “round up” change. I'm currently sending $5 each month to my account.
Related posts to stop living paycheck to paycheck:
#7 Side Hustles
This is probably my favorite part of this whole “get your finances in order” thing! Aside from your typical side hustles (like walking the dog or having a yard sale) the internet makes it possible to generate extra money in so many different ways. These side hustles can generate a little extra funds each month or can turn into full-time income opportunities. For anyone struggling to find a job, there really isn't an excuse I'll buy off on because many of these can be done from the comfort of your couch. Again, you have to put forth some effort (and a little creativity) if you want to get out of debt and have a better life. Sitting around complaining about your situation is not productive!!
Standard side hustles include:
Aside from your typical side hustles (babysitting, dog walking, cleaning houses, yard sales, etc), there are so many other ways you can earn additional income each month.
Provide administrative support as a virtual assistant
Start a blog (my favorite choice!)
Do surveys to earn money! I earn close to $500 each month from doing surveys!
So there you have it! All it takes is a little effort and a little sacrifice but you CAN improve your financial situation and stop living paycheck to paycheck. Cutting back to the absolute necessities is the first step and once you start living without them, you'll realize it is a lot easier than you first thought. Learn to say “no” to all the temptations and purchase only what you absolutely need. It's ok to treat yourself every now and then, but if you are constantly indulging, it no longer becomes a “treat” and actually becomes a burden. It isn't too late to turn your financial situation around and getting started in the smallest way is still a start. You owe it to your children to teach them how to be financially responsible so they don't end up making the same mistakes that you did. Speaking from experience here, my family never taught me anything about financial responsibility and saving for my future. I've recovered from bankruptcy and a really expensive divorce. It can be done but you have to be willing to sacrifice and put for the effort. If you need some reading material, here are some really great books on personal finance.
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In what ways have you started taking control of your financial situation? I would love to hear about it below!