In today’s economy, it’s far too easy for many of us to fall into the trap of living paycheck-to-paycheck, a desperate state where we’re able to cover our expenses but not much else. There’s no extra money left to put into saving for a better house or car, much less retirement or a medical emergency.
It’s a soul-sucking existence to come home from work each day knowing you haven’t made a bit of progress toward accomplishing any of your long-term goals. So how do you break out of this cycle? While it isn’t easy, with enough determination it's possible to stop struggling and get the breathing room you need to work towards financial security.
The first step to breaking out of a paycheck-to-paycheck existence is to figure out exactly what your expenses are each month. We often have a general idea of how much we money we spend and where it goes: to break the routine, that needs to stop. From now on you should know where every cent you spend goes. You can do this the old-fashioned way by compiling receipts, but a better way is to use one of the many free apps available to automatically track your spending and sort it by category.
Once you have a clearer picture of where your money goes, you can use that information to determine what your minimum income requirement is: the lowest amount of money you can get by on without having your electricity and water turned off. Once you know what that number is, you can start to think beyond the next paycheck and start planning.
Any money you make over your minimum income should immediately begin going towards three things: paying off any debt you have, investing in your retirement, and building your savings. The first of these is pretty simple. Credit card debt is especially toxic to have hanging around, and the interest rates will further compound your financial problems until they are paid off. Always pay your debts off first before investing in your retirement or savings, especially if you have outstanding debts like title loans or payday loans.
Once you have your finances in order, it's time to start thinking about increasing your cash flow through a secondary revenue stream. If you’re already working full time, how can you get the extra cash you need to get ahead? The answer is a side hustle. Side hustles come in all shapes and sizes, but what they all have in common is building a successful secondary income stream.
Successful side hustles almost always start with a hobby or something else you enjoy doing. A particularly popular one is creating and selling small products like jewelry, art, or memorabilia online. This is ideal for those who need flexibility in their schedules and may have more time to commit some months, and less during others. Freelancing is another option, and in the digital age, it’s easier than ever to match your skills with a business that needs them.
If you follow these three steps, you’ll soon be putting away money each month and making real progress towards improving your future and reaching your long-term goals. Don’t be a slave to your paycheck. Instead, take control of your own life and financial future.