Why is living paycheck to paycheck not ideal?
If relying on your paycheck gets you by, some may wonder what the big deal is. Sure, it can be stressful, but it works, right? We think you will see there is a better way, and here is why:
- You aren’t guaranteed your job.
Many people find themselves in the unfortunate situation of losing a job, and once that happens, there will be no paycheck to live off of.
- You can’t build an emergency fund this way.
Living paycheck to paycheck makes it nearly impossible to build up an adequate emergency fund. This is something you should have in case something unexpected took place, like recent events, an accident or unexpected car troubles, etc.
- It can cause stress.
Living with the stress of not having a backup plan can really have an effect on a person. Which isn’t good for you mentally or physically!
So, what can I do to stop living this way?
You now realize the concerns of living paycheck to paycheck, so it’s time to talk about what you can do to either avoid it or start getting out of it.
- Use automatic savings. Have your savings taken out automatically. This can make a big difference. You’ll be less tempted to spend the money you saved, and you will see your balance grow!
- Differentiate your wants from your needs. There are necessary expenses, like food or a mortgage, but lots of spending decisions can be impulsive and unnecessary. Start by being more intentional with deciphering what you need and what is just an added expense.
- Set some goals and have patience. The best motivator is an end goal. Figure out what you are striving for and remind yourself of that whenever you are tempted to make a purchase. Be patient and trust the process, because saving money takes time!
- Find an accountability partner. Talking to a financially wise, trusted friend or family member to hold you accountable is a great way to stay on track and improve your spending habits.
Getting out of living paycheck to paycheck takes time and patience, but it’s not impossible. The first step is simply to recognize the problem and start making a change. Talk to an AbbyBank Personal Banker for information on setting up an automatic transfer or opening a savings account today!