Living Paycheck to Paycheck? What you can do.
If something can go wrong, it often does.
I don't think many of us are immune to feeling the effects of Murphy's Law at some point in our lives. Emergencies are bond to happen which means it is something we can account for. However, what do you do if you don't have an emergency fund in place? Many of us are not producing enough income to cover our monthly expenses. Attempting to operate inside a deficit like the US government is trap. Borrowing from Paul to pay Peter never fixes the problem. A short-term solution to a deep a rooted issue. Here are 3 things you can do to begin to break this vicious cycle of living paycheck to paycheck.
Create a Budget
You will be surprised at the number of people who don't have one. Some say a budget sounds like a restraint but, it brings freedom. Budgeting removes the bliss of not knowing where your money is going. It removes the veil of am I wasting money on things that really don't matter. It answers questions like, am I spending more money than income I have coming in. A zero-sum budget is a blueprint of where you want your money to go. No one said not to plan for fun create a line category for pocket money and entertainment. You have freedom because its your money and ultimately you decide what matters to you.
Create Multiple Streams of Income
We live in a global economy with lots of opportunity to solve other people's problems. There are passive and active ways to generate more cashflow. Whether it's picking up extra hours on a job or investing in cash producing assets, you have options to escape living paycheck to paycheck. When you produce income from multiple sources you increase your financial stability. Income from one source can be redirected to cover expenses in another area when Murphy decides to show up. Seek out things that you are interested in. There are always ways to make money from things that create value, you just have to find out how.
Formulate a Long-term Plan
It is impossible to end up where you want, when you haven't decided where you want to go. A plan is a map towards your future. Sure, there are many twists and turns, but a plan gives you the ability to measure how far you are from what you desire. A long-term perspective removes minor setbacks and distractions from focus. It enables us to make changes to our plans when need to and empowers us to reach our goals. Set some SMART goals. Living paycheck to paycheck does not have to be a permanent cycle you repeat.
- Create a budget
- Create Multiple streams of Income
- Formulate a long-term plan