How to end Your Paycheck to Paycheck Lifestyle

living paycheck to paycheck

Living paycheck to paycheck can be daunting especially if you are used to overspending. The latter is probably the biggest reason people get into financial trouble. There are people who earn six-figure living paycheck to paycheck but still struggling against overspending. And there are those with average incomes that build significant wealth. What makes these two types of people different? I’d say it’s their attitude towards money.

Usually, people find millions of ways to overspend such as buying a more luxurious car, a bigger house, fancier clothes, you name it…

Shahram Heshmat (Ph.D., an associate professor emeritus at the University of Illinois at Springfield) says that people are concerned with justifying their choices to themselves and others. He claims that a person who has bought a luxury item, but feels guilty about it may try to alleviate his guilt by coming up with additional reasons that justify his choice, such as “it was on sale, I had to buy it.”

Maybe this is the reason why a lot of people go and spend their money in no time as soon as they get the paycheck.

So, I am going to share a few tips on how to end your paycheck to paycheck lifestyle. What I will be saying is not something extraordinary. I am just going to focus on day to day spending as it’s where you can make the biggest impact.

There are two ways of ending your paycheck to paycheck lifestyle: traditional and non-traditional or what I call it tech-supported. Under the traditional category, I put setting a monthly budget or establishing an emergency fund. The non-traditional way involves automating your money through using mobile apps, cashback services etc.. So, let’s get started.

Set a monthly budget

It may sound obvious but not all of us do this.

We tend to just spend.

We check our balance infrequently.

We hope we won’t run out of money between the paychecks.

Is this a good strategy? Nope!

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If you want to get rid of that paycheck to paycheck lifestyle, you need to put reasonable limits on your spending.

Finding that limit is simple – just total up your regular expenditure like house, gas, groceries etc. and subtract it from your income. What is left is your money. So, if after paying all your monthly fees and buying the necessary goods you are left with $1,000, then that’s your free spend for the month. And accordingly, your weekly free spend is most likely to be $250. And if you spend more, then you are overspending. Easy!

Start eliminating debt

Once you have found where you can cut back, start thinking about where you can put that extra money. One of the several options is using some (or even all) of it to pay off a debt. Any kind of debt – a car loan, student debt, anything.

Start. Eliminating. Debt.

This will not only relieve you from stress but also help your credit score because the more debt you have, the lower your credit score will probably be.

And one more simple trick here – start paying off the higher interest debt first. This will help you stop having to pay more money for just interest.

Establish an emergency fund

In addition to your monthly expenses, many other expenses can come up unexpectedly. We do not usually anticipate to have them but they do occur. And they can become a huge pain if you’re not ready to face them and especially if you are living paycheck to paycheck.

Imagine, you are driving home and one of the wheels suddenly falls off your car.

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Obviously, you have to pay for a lot of things now:

  • The tire
  • Mounting and balancing
  • Valve Stems
  • Protection plan
  • Alignment

This will cost between $300-$550.

And this can be devastating without an emergency fund with cash ready to go for these unexpected expenses.

Automate your money

How much money do you currently have in your emergency fund? If it’s below $2,000, you have to fix that and I’ll show you how.

Automation is the answer.

But it’s not only about automatically saving money. It’s more about being in control of your money, knowing where it is and where it goes. To understand what I am talking about, read these questions carefully:

How many times per month do you make spontaneous buying decisions?

How many times have you thought about investing more rather than saving more?

How many times have you wanted to donate money to your favorite charity but then found out that you cannot afford it?

These are situations that a lot of us face on a monthly, weekly, or a daily basis. This in mind, I have decided (along with a few friends, of course) to build an app that would help us all be in control of our money, stop the paycheck to paycheck lifestyle, balance how we spend, save, invest, and donate.

So, let me tell you about Looma in brief. It’s a mobile app which has got Rules at its core. Every user has the power to create, customize, edit, delete the Rules. For example, James can set up a Rule according to which Looma will shave off 5% of the money he spends on gas every time he purchases gas and move it to his brokerage account. Automatically!

Looma save, invest and donate money automatically

James sets the Rule and forgets about it. Some three months later, he may find out that there is quite a lot of money on his brokerage account which he can thus use for investing!

Let’s see another example: George can set up a Rule according to which Looma will shave off 7% every time he does grocery shopping and move it to his Coinbase account so that he can later on buy crypto.

There is no magic, no tricks, nothing difficult in here. Looma works on the simple idea that we all want to make a change, we all want to improve our lives along with our financial habits. But we simply don’t have enough time for that. Life is too busy. And there are too many distractions. So, we just cancel those changes.

Looma wants to take up that work of seamlessly changing your life from good to better.

It’s easier to give it a try!

We are in beta now. Join the waitlist!