If your employer is paying you with a prepaid debit card, it may be even more difficult to stop living from paycheck to paycheck, but it can be done. These steps can help you start thriving financially so you can begin reaching your financial goals A budget that actually works has all of your expenses built into it so that you will not be surprised when your car registration and taxes are due, or when you have to pay your insurance premiums. It also helps you deal with fluctuating bills, such as higher heating bills in the winter and higher air conditioning bills in the summer. This is the biggest step you can take to stop living from paycheck to paycheck. It can also help stop you from having periods when you go crazy with spending and end up blowing all of your money for the rest of the month. The key to cutting back is to challenge yourself to spend $50 less per week on groceries or an amount that is line with your budget. If you work on cutting back in increments, it is more manageable and you are more likely to be successful. Instead of completely slashing one category, try reducing spending in several categories by as little as $10 or $20 a month. These extra savings will add up quickly and you can try to cut back more the next month. Once you’re out of debt, you can begin building a larger emergency fund. One good rule of thumb is to save at least three to six months’ worth of expenses in an emergency fund. This emergency fund is the key to stop living from paycheck to paycheck in the long term. When you have a year’s worth of expenses in the bank, you feel better equipped for life’s unexpected challenges. Even if you start with just $50 per paycheck, you will start to feel more confident about managing your finances. Just be sure you don’t dip into your savings after you begin setting it aside. If you know that you will be tempted, consider making it harder to do that by opening an online savings account or putting the money in a separate bank. If you know that it will take two or three days (or an extra trip to a bank) to access the money, it can help curtail your impulse purchases. You should also consider putting some money in an account that you can’t touch at all, like a three-month CD. Avoid taking out a car loan or other types of loans until you have paid off your debt completely. Your emergency fund can help you pay for car repairs and cover other unexpected expenses so that you no longer have to rely on credit cards to get out of a tight situation. If you want to speed up paying off your debt, you may want to take on a part-time job. Take all of the money you make from that job, and put it toward paying down your debt. Once you are debt-free, maybe you can quit your second job and be in a better financial situation.
