Think about what you would do if your next paycheck didn’t come. Do you have an emergency fund set aside?
Living hand-to-mouth is never enjoyable. But when the economy is struggling, changing jobs isn’t easy, and layoffs seem all too possible. Therefore, living paycheck to paycheck can feel even more frightening. What would happen to you and your family if your next paycheck didn’t come? How long could you manage without it?
If the answer is not long, it is time to take stock of your finances. The good news is that there are some simple things you can do to better your situation and reduce your financial risk so that a missed paycheck does not turn into a financial nightmare. Consider implementing one or more of these strategies in order to make your financial situation more secure:
1. Reduce your expenses.
No one likes to cut back, but reducing your expenses is a really fast way to have more money left over at the end of every month. Once you have leftover cash, you can start putting it away for an emergency fund.
Look at all the things you’re spending money on that you don’t really need. Do you eat out frequently? Do you have cable television? How many cars do you own?
Take some time to think about what cuts you and your family can make today, for a more secure tomorrow. Remember, that Wii, or HBO movie will not help bail you out if your paycheck doesn’t arrive.
Are you renting more home than you need? If your lease is coming to an end soon, consider moving to a smaller house or apartment. Or, think about getting a room mate. Once you have some emergency money set aside to pay down debt and plump up your emergency fund, you might want to move back to a bigger place, especially if you are thinking of starting your own business (see below).
2. Increase your income.
You could do lots of things to earn extra money in order to start bringing more home each month to put into your emergency fund.
Consider asking for a raise. It might seem like a bad time to ask your boss for more money, but good employees are always critical to a company’s success. Don’t underestimate your value. Be specific about what ways you have saved or earned money for the company, rather than make any emotional arguments, and you might get the raise you had hoped for.
* A part-time job is another option and, in some situations, this can be a good plan for saving up for something you want or just building up an emergency fund that you will then be able to fall back on some time in the future. Maybe you can find some work to do at home in the evenings, such as starting your own business.
* Even walking the neighbor’s dogs, babysitting, mowing lawns or shovelling snow for your elderly neighbors could bring in some extra income on a regular basis.
3. Take responsibility.
Although your current situation may very well be someone else’s fault, blaming others isn’t helpful. Even if your predicament isn’t your fault, solving your financial challenges is still your responsibility. After all, who else is going to fix the situation for you? Only you can take action to get yourself out of the current financial situation you are in.
Responsibility isn’t about fixating on the past or blaming yourself. Instead, it means taking back control of yourself and your situation. And while you can’t have power over every little circumstance that pops up, you can always choose to respond effectively with a sensible course of action that will put money in the emergency fund in your bank.
4. Decide that you and your family deserve better.
Circumstances rarely change without a decision being made first. Commit to having to a better financial life, whatever it takes.
Studies show that most people earn what they believe they deserve to earn. Almost undoubtedly, there are many people out there with less intelligence and fewer skills than you who are earning more money than you are. Why is this? Primarily because they believe they deserve to earn more.
You wouldn’t take a job that paid half as much as you’re making now, because you believe you deserve to earn more. What if you thought in your heart that you deserved to earn another $25,000 a year? You can be pretty sure that you’d be out there finding a way to get it and you wouldn’t stop until you did.
Starting your own business is one of the best ways to boost your income. Thanks to the Internet, it has never been easier. For more information on how to set up and run a successful business online, see any of the handy guides by Joan Mullally or Evelyn Trimborn, designed to help ordinary people with no previous experience or high-tech computer skills to be a success at the business and marketing tasks they wish to tackle.
It can be a challenge to stop living paycheck to paycheck, but the solutions are relatively simple. Try implementing the practical tips above to enjoy greater financial security and experience a less stressful, more fulfilling life.
For more great ideas on how to survive and even thrive in this recession, see: Your Recession Survival Guide
For more information on creating wealth to start your own business, see How to Start a Successful Small Business Even If You Don’t Have Much Cash
For more information on how to start an emergency fund, see Emergency Fund 101: How to Save Money for Unexpected Expenses
Stuggling with stress over your finances? How to Cope with Money-Related Stress: Dealing With Financial Stress During the Recession