When your salary finally reaches over $100,000, all your worries about living paycheck to paycheck should be gone, right?
not necessarily. In fact, 16% of those with six-figure incomes said they find it difficult to cover basic expenses, such as food, rent or mortgage and car payments, according to a November 2020 survey by the Center for Budget and Policy Priorities.
They live from paycheck to paycheck.
how is that possible? Here’s the thing: It doesn’t matter how much money you make if your expenses exceed (or equal) your income. That’s why it’s so important to have a solid plan for your budget. Otherwise, you may end up with no savings or debt.
No matter how much you earn, here’s how to break the paycheck-to-pay cycle.
Set a budget and stick to it
There is no doubt that the cost of living is rising at a rapid pace – not only in large and growing cities, but across the country.
But slowly increasing wages can not take everyone Blame it on our $0 balances at the end of the month. A weak budget – and a lack of education in the budget – is holding back the return of millions of us. So if you don’t have a budget or haven’t updated your budget in a while, get one together.
If you don’t know where to start, a simple and straightforward approach is a good way to start fixing your budget. We love the 50/30/20 method. You can plot all your expenses as follows:
- 50% of your monthly purchases go to what you need. This includes rent, groceries, utilities, minimum debt payments, childcare, etc.
- 30% goes to your cravings – like your Netflix subscription, dinners with friends, and travel costs.
- 20% is set aside for financial goals, such as paying down debt, increasing your savings, and adding to your retirement fund.
If you live from paycheck to paycheck, the last 20% probably won’t get the attention it needs from your bank account. And while “wants” can easily get out of hand, it is your “needs” that can be the biggest cause.
So, how do you fix that? Here are some secrets to help you take back control of your spending and invest more money in your savings:
Cut costs and bills where you can
Usually, your biggest monthly expense is paying rent or a mortgage. And unless you live in #vanlife or have a great month-to-month setup, chances are you’ll find a cheaper place to live next month out of the question.
But there are some necessary bills that you can significantly reduce without sacrificing the services you need.
- Car insurance: Shop for new car insurance every six months, and you can save some serious cash. Compare car insurance rates on a website called Insure.com and you can save an average of $489 per year. All you have to do is enter your zip code and age, and it will show you your options.
- Homeowners insurance: Homeowners insurance can be a huge waste of money if you get the wrong coverage. Fortunately, I called an insurance company insurance It makes it easy to see how much you’re paying too much. Find you cheaper policies and special discounts in minutes. In addition, it saves users an average of $700 annually.
Cancel credit card payments and debt
If you have debt on a credit card for which you only pay the minimum, you are likely paying a lot of interest. And why would your credit card company care? They get richer by ripping you off with high interest rates – some as high as 36%.
Credit card payments alone can keep you in a paycheck-to-pay check cycle for years. This means it is time to get rid of these payments for good. A website called AmOne wants help.
If you owe your credit card companies $50,000 or less, AmOne will match you with a low-interest loan that you can use to pay off each of your balances.
Benefit? You will have one bill left to pay each month. And since interest rates on personal loans are low (AmOne rates start at 2.49% APR), you’ll be out of debt. who – which Much faster. Plus: no credit card payments this month.
AmOne keeps your information confidential and secure, which is probably why after 20 years in the business, it still has an A+ rating with the Better Business Bureau.
It takes two minutes to see if you qualify for up to $50,000 online. You need to give AmOne a real phone number in order to qualify, but don’t worry – they won’t send you spam emails with phone calls.
Create a separate savings account
Once you cut your monthly costs, be sure to prioritize your savings. Whether it’s contributing to your retirement plan, investing in the stock market or creating an emergency fund – you’ve done it! Congratulations on breaking the cycle and cleaning up your spending habits.
But speaking of emergency money, many Americans don’t even have $400 in the event their car breaks down or their child ends up in the emergency room.
Where should you start saving for one? A typical savings account won’t earn you much interest.
That’s why we love a free account from Aspiration. Its Spend and Save account can earn you up to 16 times the national average interest on your money, plus cashback of up to 5%, if you use an Aspiration debit card. It will help grow your emergency fund faster.
Enter your email address here for a free Aspiration Spend and Save account. After confirming your email, link your bank account securely so they can start helping you get extra money. Your money is FDIC insured and they use military grade encryption which is the nerd talk of “it’s totally safe”.
Follow these secrets, and you’ll be on your way to cracking the paycheck-to-payroll cycle.
Carrie Faber is a staff writer for The Penny Hoarder.