4 Steps to Prevent Living From Paycheck to Paycheck

Probably one of the most stressful things is to live from paycheck to paycheck. This is for the simple reason that when financial disaster strikes, it would be difficult to deal with it.

So, what will you do if your company fires you? Or your car stops working? Or if you need to take extended sick leave from work?

If these situations scare you, here are 4 steps to take:

#1: Conduct a personal financial audit

When you analyze your spending habits, you’d be surprised with what you do find. While you might think you’re spending too much money on groceries, you might be spending in excess when it comes to entertainment.

So, conduct a personal financial audit before you go about making changes to your budget.

#2: Create a realistic budget

If you don’t set financial goals, you’ll be pretty happy to put food on the table as well as pay the utility bills. But it won’t get you anywhere, financially speaking. At first, set small goals that are easy to achieve and then increase them when you do.

#3: Set achievable goals

Don’t budget based on fantasy but instead on reality. In other words, base your budget on how much you are spending at the moment. For example, if you know you’ve spent about $750-800 for groceries, then budget accordingly to that for the following month.

#4: Be Pound-wise

Simply put, eliminate expenses that have a larger influence on your overall spending as opposed to small ones that don’t impact it as much. For example, cutting your $80 cable bill makes more sense than saving on a $3 drive-thru coffee. Don’t be penny-wise but pound-wise instead.