10 Ways People Who Live Paycheck-to-Paycheck Can Save Money
February 01, 2018
Living from paycheck to paycheck until you finally have enough money is a real hassle. Unfortunately, this is the gloomy reality of over three-fourths of Americans, according to a survey from Bankrate.com. This means that very few Americans have a savings for emergency situations and therefore have nothing to fall back on when times get rough. Imagine what would happen if you had to deal with a sudden financial crisis such as a rent hike, expensive bills, overdraft fees or car repair costs. Would you be able to survive with what you have? If not, it's time to reconsider how you are spending and saving your money. Here are some tips for those who live from paycheck to paycheck:
- Create a budget. This might seem like an incredibly obvious answer, but a Gallup poll shows that two-thirds of Americans do not keep a budget of household finances. Start by tracking what you spend on everything and by estimating how much you want to spend. For example, your monthly rent shouldn't exceed one-third of your monthly paycheck. You should also plan out how much you spend on groceries, transportation and other important things. This will give you a sense of control over your financial situation and really help you map out how much you're spending on what items.
- Use cash, not credit. One way to feel like you have more control over your finances is by paying with cash rather than credit cards and debit cards. It's easy to lose track of how much money you are spending when you use a card, but quite easy to know when you are paying with dollar bills. You can withdraw a certain amount of money at the beginning of each week to ensure that you don't spend more than that amount. This way, you will have an easy way to tell how much you have spent and how much you have left.
- Dine in. Eat at home as much as you possibly can. Eating out, even at fast food restaurants, can be quite expensive. Even a $10 sandwich at a restaurant can appear quite expensive when you realize that the same thing can be made at home for a fraction of that price. Stock up on groceries at your local supermarket and prepare food beforehand. If you're going out for the night, pack some dinner to bring with you later on. This will help you resist the temptation of spending unnecessary money when you're hungry. About 19 percent of workers don't stick to their planned budgets often because of buying food. Abstaining from meals here and there can really make a big difference.
- Cut back on your expensive hobbies. How much are you spending each month on entertainment? It's time to critically analyze what you do for fun and find cheaper alternatives. Instead of going to the movies, stay in and watch something on Netflix. Instead of paying for your monthly World of Warcraft subscription, play a free game like Hearthstone. That being said, you're allowed to treat yourself from time to time, but you should be cautious of how much you are actively spending.
- Ask yourself, "Is it really worth it?" Whenever you are tempted to buy something new, pause for a second and ask, "Is it really worth it to spend money on this?" For example, let's say you are tempted to buy a $10 movie ticket for the latest blockbuster film. Would you be perfectly fine with waiting until it comes out on Redbox? How else would you spend those $10 by not going to the movies? Weigh your options and determine if the purchase is really worth it or not.
- Sign up for cost-saving memberships and deals. If you look hard enough, you can usually find certain ways to save money on things that you already buy. The savings might seem like they're only a few bucks here and there, but they can add up to huge amounts over time. For example, some public transportation systems offer monthly passes. If you want to buy one, first calculate the cost of each round-trip and how often you will be using it. Will it save money to buy the monthly pass? If so, why not go for it? Similarly, many grocery stores offer membership discounts, often for free. Signing up for a membership will make each shopping trip a little cheaper, which adds up to big savings over time.
- Use helpful apps and programs that can save you money. If you have a smartphone or a tablet, there are literally thousands of apps at your fingertips. Many of them are more useful than your average social media or free-to-play mobile games. For example, GasBuddy reports the prices of local gas stations so that you can compare and contrast the cheapest options. Ibotta gives you back money for the items you purchase. Sure, you will only get about fifty cents back for every gallon of milk, loaf of bread, or bunch of bananas that you buy, but those savings will add up over time, especially if those are items you buy every week. Lastly, you should also make an account with Paribus.co. Paribus is an excellent website that has been featured in publications such as TechCrunch and The Verge. It allows you to get your money back after purchases if there have been price changes. For example, Amazon might be obligated to refund you if you recently bought a $30 sweater that was lowered to $20 a few days after you bought it. Paribus will get you back 75% of the difference, keeping the last quarter for themselves.
- Tone down on energy use. Your monthly utility bills often tack on a hefty chunk of extra costs to your already expensive rent. Find ways to cut back on your electric and energy bills as much as you can. Try limiting the time you spend each day in the shower by setting a timer for yourself. Unplug your electronics when you're not using them, especially at night. Plugged-in electrical devices often still suck up energy, even when they're turned off or the device is fully charged. Turn off lights whenever you exit a room. Replace your regular light bulbs with energy-efficient alternatives. A little bit of savings here and there can make a big difference.
- Don't spend money just to spend it. Many people like to treat themselves to something nice when they get their paycheck or a new job. While this is certainly a nice thing to do for yourself, you should cut back on it until you feel financially secure enough to justify extra purchases. Sure, it might be nice to treat yourself to a nice dinner, but is it really necessary? Would staying at home and dining in be that much worse? Always keep your finances in mind before making any major decision.
- Change the major problems affecting your finances. Okay, so you have found cheaper alternatives for your food, games and energy consumption. But why stop there? Take into consideration how much your car and gas is costing you. If you are driving a gas-guzzler or some other expensive vehicle, consider selling it and buying a fuel-efficient hybrid car instead. What about your rent? Consider getting an additional roommate or looking for somewhere cheaper to live. Even if your monthly rent is $100 lower, that still amounts to an extra $1,200 a year.
Learning good financial habits is one of the most valuable things that anyone can do to stop the paycheck-to-paycheck cycle. Forming these good habits and techniques will not only help you when you're trying to survive from paycheck to paycheck, but can make you noticeably richer later in your lifetime. Practice these important money-saving techniques until you can find a way to get back on your feet and live comfortably.