We know the routine all to well. We work, we wait for payday and then we spend it. We repeat this cycle and fail to notice that we are stuck in a trap. A trap that we’ll never get out of even if we get a payrise.
The trap is called “Living from Payday to Payday,” and so many people are caught in it but there is a way out.
So what can you do to get out of it?
Step 1. Acknowledge that living this way is a problem and that it needs to be dealt with. This is the first step to making a change to your financial future. It is mostly likely the problem stems from one of two issues (or a mix of both):
- You spend more than you earn on luxuries, entertainment and incidentals
- You don’t earn enough to cover your basic living expenses
Step 2. Understand your current financial situation and learn to manage it in such a way that you can pay your bills on time and be prepared for future financial changes.
- What are your current debts?
- How much do you have in savings/emergency fund?
- How much income do you bring in?
- What are your expenses?
Step 3. Examine your bank account statements. Look at what you are spending money on. So many people don’t know how much they are spending all their money on. It seems to be there one day and gone the next. Look for amounts you spend on:
- Eating out
- Takeaway coffee
You may even find you are paying for things you don’t even use anymore like subscriptions and gym memberships.
4. Stop shopping. Until you understand what your current financial situation is, unplanned shopping is not something you can afford to do. Even if there is money left in your accounts, this money may be needed to pay less frequent expenses such as car registration, annual insurances, appliance servicing and replacement.
5. Know when your bills are due. You avoid unnecessary late payments and overdrawn account fees when you get your bills paid on time.
6. Have a goal. Know what’s important to you and why. This will help you stick to your plan even when you are tempted to spend your money on distractions.
7. Have a plan for regular weekly expenses, irregular expenses as well as future unpredictable expenses. Life is unpredictable so having some money put aside for possible job losses, illness or family events helps make these difficult times less painful.
If you are tired of living payday to payday but aren’t sure how to get out of the cycle drop us a line and we’d be happy to have a chat about whether our program would be an option for you.