You often hear people say that they are one paycheck away from being homeless. The good news is that you don’t have to live paycheck to paycheck and put yourself in that position. Taking control of your money now can help you avoid living paycheck to paycheck.
Live Within Your Means
One of the riskiest things you can do is live beyond your means. If you are strapped for cash all of the time and always spending, you are probably living beyond your means. Only spend what you make and save some along the way.
Establish an Emergency Fund
Another reason people put themselves at risk for living paycheck to paycheck is because they have no savings. Establishing an emergency fund is one way to ensure you are in control of your paycheck and not the other way around. Put on paper how much you will save each week until you have at least a thousand dollars in the bank as an emergency fund.
Avoid Credit at All Costs
Credit can ruin your monthly cash flow. If all of your paycheck is going to pay money you owe, you will never get ahead. You will basically be waking up to drive a car you don’t own to a job you don’t like to pay for a house you are never in. Don’t make life miserable by overextending your monthly cash flow to credit.
Work with Your Partner
Another casualty in making sure people live paycheck to paycheck is not knowing what your partner is spending. You won’t ever get ahead in the money game if you or your partner are making the money well dry. Keep an open communication line about money. Don’t make it into a fight, but work together to ensure everyone knows what’s getting spent. This isn’t about control, it’s about ensuring you don’t live paycheck to paycheck.
Don’t Become House Poor
You and your partner can both have awesome jobs, but if you are house poor, you risk living paycheck to paycheck. Just because the bank says you can afford a $450,000 mortgage, doesn’t mean you can. Stick to your guns and what you can afford! You’ll be glad you didn’t go over what you can afford on your mortgage because this isn’t a monthly variable that’s likely to change.
Since the majority of Americans are living paycheck to paycheck, most people think it’s impossible to get out of this trap. Take these tips to heart so that you can also avoid living paycheck to paycheck and actually build up some sort of financial wealth for your future.