We continue with our series on financial worries, their implications on the lives of those that live in their midst and how we can overcome them to live a worry-free financial life. In this edition, we tackle the worries of living paycheck to paycheck, where a person relies on their monthly paychecks to meet their financial obligations, with no savings left over.
Living paycheck to paycheck might not seem so bad at first. It means that you are on top of bills that you can cater for your cost of living without having to borrow. However, if that’s all you have, there’s no way to look to the future, you can’t really afford to save any money, there’s no real security with the money you currently have.
This kind of situation results in there being no savings to fall back on in case of emergency and lands you into a cyclic trap of waiting for the next salary to clear debts, buy essential items and feel in control of your money.
In general, and due to the increasing effects of the rising interest and inflation rates, most of the working class have limited space in their budgets and stand to suffer tremendously should a financial emergency arise.
A great starting point for taking control of this situation is having a financial plan. That’s right, you need to have a driving force behind making a change in your financial life and eliminating financial worries. The plan will detail your goals and you will have direction of where you want to be and start working towards that.
There could be several ways you can accomplish these goals but having a perspective of where you currently stand will help you plan better. Monitoring your expenses to find out where your money is going and changing the direction of these expenses to cater for savings, is a good starting point. This is all in line with establishing some short-term savings so that you’re not only covered if an emergency strikes but have a little breathing room even when things don’t go wrong.
Start by cutting some expenses in your budget to free up room for savings, whether it’s a series of smaller changes, packing your own lunches, or a single more significant change, like moving to a cheaper apartment. Additionally, consider making some additional income, doing some side work will bring in some additional cash to save.
While you may not achieve a saving to get out of living paycheck to paycheck overnight, if you work on slowly building some cash reserves, you’ll be much calmer and relieve some financial pressures. Eventually you will reach the point where savings can bail you out of sticky situations, and as you get closer to that goal, you’ll likely see your stress begin to wane.
*Justine Domingues is an aspiring CA (NAM) with a drive to make financial education widely available. She is the founder of Financial Zula, a YouTube channel that focuses on making financial education available. For more information, please check out Financial Zula on Youtube.
