Are you living paycheck to paycheck? I assume that if you have decided to read that article you are somewhat in trouble. Well, guess what! You are not the only one.
The Canadian Payroll Association found in its 2018 survey that 44% of Canadians would have difficulty meeting their financial obligations if their payroll was late.
Its not better for the U.S.A, 59% of U.S. adults said that they live paycheck to paycheck to a survey done in 2019 by Charles Schwab.
Here is list that will not only put light on your bad habits but also give you some solutions:
- You don’t put in the extra effort:
Depending on how deep you are in trouble, you may need to get a part-time job to get through it. You really want to come through this, so you can afford more for yourself, but you don’t want to do any sacrifices.
- You only pay the minimum:
If you’re just paying the bare minimum, paying off your debt is going to take forever. This is the theory of compound interest.
So at least try to devote 30% of your income to pay off your debts.
- You think the solution is to earn more:
And no, unfortunately, the key is not the income you have but the expenses you make. All the rich are frugal, not cheap, there is a difference.
The frugal will first buy only what is needed and second will buy the items that are in a bargain or on discount.
On the other hand, the cheap will do these same things, but they won’t be open to sharing their money with anyone, even their family.
- You don’t have a why:
If you don’t have goals, reducing your debt will seem impossible. It’s like being stuck in a forest and not knowing where to go.
Having clear goals is the best encouragement.
- You don’t have a budget:
Probably the majority of you don’t even know where your money is going. You think you know it but you don’t really know it.
Believe me, once you make a budget you are going to realize that you end up spending a lot more on certain things than you thought. That you are not being reasonable in these expenses.
The solution is to make these expenses reasonable, set your goals as a maximum amount to spend, for example on coffee, then the remaining uses it to pay off your debts or save money.
- You buy what you can’t afford money:
Be honest with yourself, you are not a hip-hop singer or an actor in Hollywood so why try to pretend you are.
Be smarter, it’s not the $ 100,000 you spent on a Tesla that matters, but the $ 100,000 that might have been in your bank account that is.
- You value the opinion of others:
Who do you want to impress? People who are rich or people who are poor? Because believe me, just because you have a Lamborghini doesn’t mean you’re going to impress your idols with full bank accounts.
So the Lamborghini will impress people who are probably even more broke than you!
- You buy things that you don’t need:
It can happen that we get carried away by our emotions and end up buying treats.
Personally, I believe it is okay to buy things that can bring us happiness. I disagree with people who see this as something negative, who are going to say ‘he’s a materialistic person’.
However, it could be a problem if you are living paycheck to paycheck, you must first get yourself to a comfortable situation before you start buying gadgets. If you don’t become disciplined, you will still be living broke.
- You use the credit card as if they were bills:
The credit card is a loan so you should think of it as such. Every week you should pay back the full amount you spent on the week.
For example, all the lunches, coffees, dinners, beers, etc… that you paid with the credit card, on Sunday you should make a transfer on your credit card to put it at Zero! P.S: Not having a credit card can be a problem too, because if you are eventually planning to make a big purchase, say a house.
The bank will want to see your background, that is if you are a good payer. If you don’t have a credit score, borrowing will be next to impossible.
- You’re not using unexpected cash flow wisely:
For example, you got a raise, you just got an inheritance, you get a bigger tax refund, etc … and what you do is increase your expenses.
What you should do is pay off your debt or save it (Obviously you can always take a little amount to spoil yourself but try to use a larger portion to achieve your goals).
I know this is boring. But think about point 3, if you have a clear goal it will be easier.