The coronavirus pandemic revealed the considerable number of people in the United States who are living paycheck to paycheck.  Though wages have slightly increased in recent years, just about everything has become significantly more expensive.  

Add in the prospect for inflation in the months and years ahead and there is a good chance even more Americans will be living paycheck to paycheck.  However, with prudent financial planning provided by an experienced Greeneville TN financial advisor, you can avoid the trap of living paycheck to paycheck.  Here’s how to do it.

How to Stop Living Paycheck to Paycheck

The first step to getting your financial house in order is to meet with a Greeneville TN financial advisor for guidance.  This fee-only, fiduciary CERTIFIED FINANCIAL PLANNER™ Profesional will help you create a truly comprehensive financial plan.  Delve into the details of your financial situation with this specialist and he or she will create a roadmap to financial success that ultimately helps you save, invest and stop living paycheck to paycheck.  

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Your CERTIFIED FINANCIAL PLANNER™ Professional will help you establish realistic goals to strive toward.  Even if your unique financial goals are saving and investing a small amount of money per month, doing so is certainly better than living paycheck to paycheck.  

Your target saving and investment goal gives you something to strive toward.  Be patient, watch your savings account balance and investment account balances increase and you will have that much more motivation to continue working hard and building up your financial buffer.

Be Mindful of Your Spending

Part of the challenge of putting an end to living from paycheck to paycheck is keeping your spending under control.  Keep a close eye on your spending for an entire month.  Track each and every expense across this period of time and you will have a better idea of what you are spending your money on.  

This spending awareness makes it that much easier to prioritize certain expenses and make the alterations necessary to stockpile savings and money for investments rather than burning through the entirety of your cash from one week to the next.

Tracking your spending begins with the large monthly expenses of rent or your mortgage along with food, utilities, and insurance.  Write down all of these expenses.  If you do not currently dedicate a certain percentage of your paycheck to savings and/or investments, it is time to redirect some of your earnings to these accounts for posterity’s sake.  

Keep in mind, such savings and investments are the only way to break the cycle of living from paycheck to paycheck.  Strive to save consistently, even if it is only $100 a month, and you will feel that much more satisfied with your personal finances.

Tracking expenses also extends to the small stuff such as your cable TV bill, your internet bills, gasoline, video games, movies, social outings, and beyond.  Keep all those receipts and invoices so you can track the entirety of your spending throughout the month.  Once you have all of your expenses detailed through close monitoring, it is time to shift your attention to determining how to cut back on spending. 

Consider how much money you are spending on items and experiences that are not essential.  As an example, if you are paying for three different streaming services, you may decide you are spending more money than you should on entertainment.  Cut back on two of these expenses or eliminate all of your streaming services, choosing to use your free time to watch TV, DVDs, YouTube, or another form of entertainment that is comparably cheap.  Replicate this process with additional nonessential spending, redirecting the money you save to your savings and investment accounts.

Proactively Address Your Debt

If you have been hesitant to sit down and analyze your debt, you are not alone.  Most people do not want to spend time thinking about how much money they owe for student loans, automobile loans, home loans, credit cards, and so on.  Though spending time analyzing personal debt is certainly stressful, doing so has the potential to save you a bundle of money as time progresses.  Spend some time analyzing your debt.  

Consider which types of debt are essential to survival and success as compared to debt that is unnecessary.  It is unnecessary to have several credit cards.  However, a mortgage and student loans may be essential for financial success as a resident of the United States in 2021.  It may make sense to borrow money for your college education and your home yet it does not make sense to go deep into debt for a fancy car or lavish items purchased with credit cards.  

Problems will inevitably arise when you borrow more than you should or live well above your means as a result of credit card spending.  It is time to mentally differentiate borrowed money from the money you have earned.  Though studies show people think of the money they borrow as their own, the truth is borrowed money is not earned.  Rather, this is the lender’s money, meaning it has to be paid back to the lender with interest tacked on.  

The challenge lies in getting out of credit card debt.  Maintain a positive attitude, proactively attack your credit cards with the highest interest rates and take action.  Cut back on spending and redirect your available cash to your lines of credit with particularly high-interest rates.  Once you pay down those high-interest rate credit cards, shift your attention to credit lines with lower interest rates, paying them down until the point that you carry little or even no credit card debt.  

Be Patient and Heed the Advice of Your CFP®

Attempting to break the cycle of living paycheck to paycheck will prove that much easier with the assistance of a Greeneville TN financial advisor.  This expert in how to stop living paycheck to paycheck will provide truly invaluable financial advice.  Leaning on a CERTIFIED FINANCIAL PLANNER™ Professional will force you to hold yourself accountable as another individual will be aware of your financial progression or regression, ultimately providing you with the motivation necessary to reach your financial goals.  

This professional will also help you develop a sound financial plan for the future.  Be patient, continue working hard and you will eventually emerge from the vicious cycle of paycheck to paycheck living with a financial nest egg that continues to grow with each passing day.

At Sapiat Asset Management, we use a personalized process to identify the financial and retirement planning strategies that meet the needs of our clients. Our knowledge of your financial situation is a big part of the foundation that drives our relationship with you. Contact us today for a complimentary consultation.

Sapiat Asset Management is a Fee-Only, Independent, Registered Investment Advisor (RIA), specializing in goal-oriented financial planning and investment management for Gen X Individuals & Families, their Businesses, & the Trusts that benefit them and their heirs.