A very big problem of living paycheck to paycheck is that one unexpected illness, accident or other unexpected event (like an emergency evacuation!) can push you over the brink financially. Unfortunately, many people in this day and age, even people that make a pretty decent income can find themselves in this position. Even worse, should the situation cause you to not be able to work or earn a living, financial ruin may not be far off.
Spending less than you earn and having an emergency fund are great ways to deal with unexpected expenses. You can stave off the perils of living paycheck to paycheck by implementing a few simple steps.
Prepare for the unexpected
- Life’s unexpected happenings have a knack for happening at the worst possible times, i.e., Murphy’s Law. You will never be able to predict when these things will happen, so be prepared for unexpected expenses that come along to cushion yourself from financial problems due to unexpected expenses.
Find a way to save something
-Even if you start off really small, like $20 a month, that would be $240 you might not have after a year. That amount could help you out if you get in a financial jam.
Trim your expenses
-If you are living paycheck to paycheck and having trouble saving money , check out my tips on kick starting your debt snowball for ways to trim expenses. By trimming expenses, you can free up some cash for saving.
Raise extra cash and increase your income-
Boost your income, and sell things you no longer use to raise some extra cash to give you a cushion. Find a part-time job, have a garage sale, or work overtime if possible.
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Sam @ Fix My Personal Finance 09.10.08 at 11:05 am
For me 2 most important part to ensure you don’t end up in financial disaster are 1) Live within your means which is similar to spending less than what you earn and 2) Find other ways of increasing your income. On number 2, I do a lot of planning on how to increase my passive income. Hopefully, blogging will make sense.
Great post!
Double 09.10.08 at 9:53 pm
If you want to become financially independent, then not living paycheck to paycheck is one habit that needs to be fixed.
RC 09.11.08 at 6:46 am
@ Sam- I agree with both of your points! Both are key to keep yourself in good financial shape. Good luck with #2 and the blogging!