It is tough to live paycheck to paycheck especially coming out of the pandemic. But there are smart financial choices you can make today to help you get through it. It is true that the health crisis did not make things easier for people in managing their finances. In fact, it put a lot of Americans back up against the wall trying to survive.
Over 20 million Americans lost their jobs around May of 2020 due to the pandemic. A big reason for this is the directive to stay at home for an extended period of time. This affected the economy deeply. Businesses had to quickly change gears and try to stay afloat. With most people staying at home, business operations proved difficult for a lot of companies.
This meant that most workers were let go or placed on furlough. Some were even forced to fast-track their retirement plans. The transition was not easy, especially for those who are living from paycheck to paycheck. Even as the economy is starting to pick back up, managing your finances is still a difficult task to take on.
If you are still trying to make ends meet with each paycheck? It is a tough place to be in. It just means that you need to make tough decisions as well to get out of your current situation. Here are a few things you can consider to help you improve your finances.
Go over your expenses thoroughly
The first step is to sit down and go over your finances, particularly your expenses. It is important to get a good handle on what your monthly payments are. Just as with most challenges in life, you need to have a clear picture of the problem. In this case, you should list down every single item in your finances. You can start with your household budget.
To help you navigate through a paycheck to paycheck ordeal, it helps to have a comprehensive household budget. This means that you need a list of all your income as well as expenses. From the smallest item to the biggest expenses, you need to list them down. The objective is very simple – your income should cover your expenses.
At this point, you can also identify all your expenses and figure out a way to cut down some of the costs. It will be difficult to cut down costs if you do not have an idea of what they are. You can start with either the biggest expense item or the smallest one. The goal is to cut down on any cost item to help you free up more of your income.
Lower down housing cost
When you are living from paycheck to paycheck, your housing cost usually is at the top of your list for the biggest expenses every month. Whether you are renting or paying a mortgage, house payment every month is big. Unless you choose to go to the extremes of leaving a traditional house behind and living on the road with a camper.
But there are other options you can look into. If you have a mortgage, you can reach out to your lender. Talk to them and explore ways to lower your monthly mortgage. Your credit score might have improved from the last time you took out the loan. This means you might be approved for a lower interest rate if you refinance your loan.
If you are renting, it would not hurt to talk to your landlord to check if they can help you out with your payment. There will be times when rent is really high. What you can do is look for a place that offers lower rent. There are times when you can also explore getting a smaller space to save on rent. If you are able to save on rent, that is a significant amount you will free up.
Streamline food budget
When you are trying to get by from paycheck to paycheck, food is another cost item you can try and lower down. No, it does not mean you will not eat and starve yourself to death. Cutting down on your food expenses can start with a closer look at how you trade convenience with food. Do you prefer ordering out or cooking your own meals? Do you still choose to line up for coffee every morning or brew your own pot in the morning?
The more work you have to put in when it comes to preparing your food, the more you can save. So rather than ordering out, why not cook your own meals? You can also buy some items in bulk which could save you money as well. You can also involve your family and even kids when you prepare your meals at home.
But you do not have to totally give up convenience though. Like your favorite coffee, you take every morning. You can cut down on it but still cut yourself some slack for your favorite drink every morning. If you find that your own brew tastes better, then you can switch to it entirely. The goal is to make small changes to help you save money.
Increase your income
This is a little more difficult to accomplish when compared to cutting down on your expenses. But if you are able to lower your expenses and increase your income, you get to improve your chances of making your paycheck to paycheck situation a little better. However, looking for ways to increase your income is easier said than done.
Normally, putting in extra hours at work helped you bring in some extra pay from overtime work. But you need to be more creative nowadays and look for other opportunities. Trying out a side hustle has been the go-to for a lot of Americans in recent years. This is true especially when the pandemic hit and job security was a big issue.
If you are looking for a side hustle, it would be great if you can connect it to a hobby. Most people refer to it as an income-positive hobby. The good about this is that you earn extra money while doing something you already like doing. On one end, you increase your income and on another, you have a great time doing it and improving your craft.
Invest in yourself
Even if you are trying to make ends meet, never stop learning and improving yourself. And it’s not always about money. Staying healthy is one of them. A tight budget can be stressful and stress can manifest physically and affect your health. Investing in yourself can start with managing stress to help put you on the path to a healthy lifestyle. This is important as the WHO shared that almost 25% of people worldwide suffered depression and anxiety because of the pandemic.
Investing in yourself could also mean learning a new skill or improving an existing one. It could be an hour every night improving what you already know. You can also spend time learning a new and in-demand skill. You might think it will not make much difference. Start with the basics and keep learning and improving.
Paycheck to paycheck finances is not easy and the pandemic made it a lot more challenging than it already but there are ways to make it work. It will not be easy and you need to make a few sacrifices but it is doable.