Hop off the living paycheque to paycheque train

FOR many of us payday is like a national holiday — we get to do what we do every month — meet all, or well, most, of our financial obligations, and get enough food that will last until the next pay period. And while we get to breathe a sigh of relief for a moment, banker Vaughn Levy says that unless we break the cycle of paycheque to paycheque living, not only will goals elude us, but we will never be able to get ahead financially.

Are you struggling to keep afloat financially and it’s not even the middle of the month? Levy shares tips on how to escape this while avoiding getting debt trapped.

Take a hard look at expenses

The truth is, many of us lock ourselves into expenses that we can’t afford. We buy expensive apparel, rent houses in expensive neighbourhoods, borrow to buy luxury vehicles, and live a lifestyle that is generally outside of our budget. Instead of depleting your bank accounts and maxing your credit cards to accomplish this, you may want to consider downscaling to a less expensive lifestyle. So, for example, consider a safer environment where the rent is less expensive, a nice low maintenance vehicle, and skip some of the events.

Track your spending

Truth be told, often you’ll see something and you like it, you swipe, and go without thinking or keeping track of just how much was spent. Especially if you are not in the habit of going online to check expenses before the arrival of the next paycheque, you may find yourself in a rut. One way to avoid this is by setting daily limits on your card and leaving the card at home if you need to. This is the best way to make sure you do not overspend, especially if you do not have the discipline to tell yourself no when you are about to make an unplanned purchase.

Make savings automatic

Sometimes we go about treating with our salaries wrong; instead of prioritising savings we often use language like “if there is any left” or “if possible”. If you are going to break the cycle of living your life paycheque to paycheque then you will need to set up an automatic saving option with your bank. Then you can pretty much allocate what is left of your salary to satisfy your budget. This is the only way that you will have a little something put aside so that you don’t always have to keep refreshing your online account homepage every five minutes on payday.

Make a budget and stick to it

Many of your expenses are necessary — you must eat so you need to have your groceries; you need to pay your rent or mortgage, the utilities, and of course if there are children, childcare expenses. Make a list of all your current monthly expenses — with your necessities on one side and your discretionary spending on the other. Now look at how much you can spend for the month and subtract necessities from this budgeted amount. If there is some leftover money from your list of discretionary expenditures, consider what you can do and what you will not be able to do, then alternate them each month.

Explore other ways to cut back on expenses

You want to take a hard look especially at your fixed expenses and see if you can cut back on expenditure. So, for example with grocery shopping, consider buying wholesale if you are going to buy things in bulk. Go to the market instead of getting vegetables, fruits and ground provisions in the supermarket, and implement energy-saving methods at home. Opt for fewer take-outs, and get family and friends to assist with childcare instead of hiring people, etc. Everybody’s expenses are different so just look at what you have and see how best you can forego related expenses.

Save all (extra) money

From time to time you will get a raise, a friend might send you a little change on special events, or you might get a little bonus at work. When you get this money, instead of immediately thinking, oh let me treat myself, consider saving it instead. In fact, pretend you didn’t get it all. It would be good if you could do this in a separate account and consider it as an emergency fund and forget that it is there unless, of course, a real emergency occurs.

Consider a side hustle

You may not just be good at your primary job, you might have a couple of skills up your sleeves as well. If there is a possibility that there is a niche for your talent that you can tap into outside of work hours, your hustle can supplement your income so you don’t go crazy when payday comes and your salary is not in your account at midday.