No matter how much you earn, hereâs how to break the paycheck-to-paycheck cycle.
Once youâve cut down your monthly costs, make sure youâre prioritizing your savings. Whether thatâs contributing to your retirement plan, investing in the stock market or building up an emergency fund â you did it! Congrats on breaking the cycle and cleaning up your spending habits.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
Theyâre living paycheck-to-paycheck.
Thatâs why we like a free account from Aspiration. Its Spend and Save account could earn you up to 16 times the national average interest on your money, plus up to 5% cash back, if you use Aspirationâs debit card. Itâll help grow your emergency savings fund that much faster.
Make a Budget and Stick to It
Where should you start saving for one? A typical savings account wonât earn you much interest.
Enter your email address here to get a free Aspiration Spend and Save account. After you confirm your email, securely link your bank account so they can start helping you get extra cash. Your money is FDIC insured and they use a military-grade encryption which is nerd talk for âthis is totally safe.â
Credit card payments alone could keep you in the paycheck-to-paycheck cycle for years. That means itâs time to get rid of those payments for good. A website called AmOne wants to help.
- 50% of your monthly take-home goes to what you need. That includes rent, groceries, utilities, minimum debt payments, childcare, etc.
- 30% goes to your wants â like your Netflix subscription, dinners with friends and travel costs.
- 20% is earmarked for financial goals, like paying down debt, growing your savings and adding to your retirement fund.
If you have credit card debt that youâre just paying the minimum on, chances are youâre paying a ton in interest. And why would your credit card company care? Theyâre getting rich by ripping you off with those high interest rates â some up to 36%.
But speaking of emergency funds, many Americans donât even have 0 saved in case their car breaks down or their kid ends up in the ER.
Cut Costs and Bills Where You Can
Not necessarily. In fact, 16% of six-figure earners said they have difficulty covering basic expenses, such as food, rent or mortgage and car payments, according to a November 2020 survey by the Center on Budget and Policy Priorities.
Itâs no question that the cost of living is going up at a rapid pace â not just in big, growing cities, but all around the country.
- Car Insurance: Shop around for new car insurance every six months, and you could save some serious cash. Compare car insurance prices on a website called Insure.com and you could save an average of $489 a year. All you have to do is enter your ZIP code and your age, and itâll show you your options.Â
- Homeowners Insurance: Homeowners insurance can be a huge waste of money if you get the wrong coverage. Luckily, an insurance company called InsurifyÂ makes it easy to find out how much youâre overpaying. It finds you cheaper policies and special discounts in minutes. Plus, it saves users an average of $700 a year.
Eliminate Credit-Card-Debt Payments
If you donât know where to start, a simple and straightforward approach is a good way to begin your budget overhaul. We like the 50/30/20 method. You map out all your expenses like this:
Usually, your biggest monthly expense is your rent or mortgage payment. And unless youâre living the #vanlife or have a sweet month-to-month set up, chances are finding a cheaper place to live next month is out of the question.
The benefit? Youâll be left with one bill to pay each month. And because personal loans have lower interest rates (AmOne rates start at 3.49% APR), youâll get out of debt that much faster. Plus: No credit card payment this month.
So, how do you fix that? Here are some secrets to help you regain control of your spending and put more money in your savings:
Yet slowly rising wages canât take all the blame for our It takes two minutes to see if you qualify for up to ,000 online. You do need to give AmOne a real phone number in order to qualify, but donât worry â they wonât spam you with phone calls.
Create a Separate Account for Savings
If you owe your credit card companies ,000 or less, AmOne will match you with a low-interest loan you can use to pay off every single one of your balances.
When your salary finally tips over 0,000, all your worries about living paycheck-to-paycheck should be gone, right?
Follow these secrets, and youâll be well on your way to breaking the paycheck-to-paycheck cycle.
AmOne keeps your information confidential and secure, which is probably why after 20 years in business, it still has an A+ rating with the Better Business Bureau.
But there are some necessary bills you can cut down significantly, without sacrificing the services you need.
Kari Faber is a staff writer at The Penny Hoarder.Â
How is that possible? Hereâs the thing: It doesnât matter how much money you make if your expenses outweigh (or are equal to) your income. Thatâs why itâs so important to have a solid plan for your budget. Otherwise, you could end up with no savings and in debt.
If youâre living paycheck-to-paycheck, that last 20% likely isnât getting the attention it needs from your bank account. And while the âwantsâ can easily get out of hand, itâs your âneedsâ that can be the biggest culprits.