In America, living paycheck to paycheck is commonplace. The majority of workers are unable to set aside significant savings, even if their income exceeds six figures. The truth is that life is expensive and unexpected costs arise every month. So if you find yourself out of money before your next payday, what can you do?
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A survey by The Penny Hoarder found that nearly 60% of people cut spending in an effort to save money before their next payday. About 36% are using credit cards to survive the crisis and more than 36% are dipping into their savings. While these are all viable options, some make more sense financially than others.
See what you can do if you run out of money before payday.
Review your expenses
If you find yourself running out of money before your next payday, the first thing to do is review your spending habits. If you haven’t already, create a budget; consider all your income and expenses. To get started, print out your last few months of paychecks, as well as bank and credit card statements.
Make a list of essential bills you need to pay each month, such as your rent or mortgage, car loan, and utilities. Now categorize your other expenses into categories such as entertainment, clothing, healthcare, education, and more. This will help you understand where your money is going each month and where you can cut costs.
Prioritize your money
Your housing, food and transportation costs are a given. Unless you plan to downsize, these are more or less fixed costs that need to be paid for first. However, other areas such as entertainment and clothing shopping may need to take a step back for a while to allow you to reach your next paycheck.
Once you look at how you spend your money, you might be surprised at how much can be cut. Look at things that are auto-pay. Are you paying $29.99 for a subscription you never use? Do you have Hulu, Netflix, Prime and Disney+? Can you live with just one? All of these small discounts can add up to big savings in the long run.
Increase your income
Once you’ve prioritized your expenses, see if you can increase your income. Consider getting a side hustle like tutoring, food delivery, pet sitting, or selling your stuff. Think about what you could offer a business or individual, such as social media management or personal shopping.
If you’ve been with your employer for at least a year (in some cases, six months), consider asking for a raise. Do your research and make a compelling case for why you won the raise. Have you recently taken on more responsibilities or accepted a new position? What do you offer the company that makes you a valuable asset?
Find relief programs
Once you’ve reviewed your expenses and looked for ways to increase your income, see if you qualify for any relief programs. You may be able to apply for a deferral of your student loans or be eligible for help with your utility bill. There are state and federal programs available depending on your income.
Slide to Savings
If your money troubles are temporary and you have a rainy day fund, now is the time to use it. Once you’re in a healthier financial position, you can pay yourself back and rebuild your savings.
And if you’re really in trouble
You can still put money on your credit cards; just make sure you pay at least the minimum on all your cards or your credit could take a hit. Although this fix is not a long-term solution, it can help you through a tough time. It doesn’t hurt to look for better rates and 0% balance transfer offers, 0% introductory APR and cashback incentives. Remember: credit card debt is easy to accumulate and very difficult to pay off.
Finally, other unsavory options may include payday loans, layaways (“buy now, pay later” programs), or borrowing from friends (unless you know you can pay it back) .
If you’re like many other Americans and find yourself living paycheck to paycheck, just know that there are innovative ways to stretch your money and stick to your budget – without having to Win the lottery.
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