How to save money when you live paycheck to paycheck

Are you living paycheck to paycheck? If so, you’re not alone. MarketWatch.com recently reported that this is exactly how half of American families live. In another survey, the Federal Reserve Board announced that 47 percent of respondents at all income levels (including six figures) said they could not cover a $400 emergency without borrowing or selling something. Barely getting by is taking its toll in the form of worry and frustration for many. And for others who are out of credit and favors, one life emergency could spiral them into the cycle of poverty.

Is making more money the answer?

A lot of people think more money is the ticket to a better life. If you had more money, would you spend it or save it? At least half of all Americans opt to spend instead of save today for a better financial future. This is exactly why we see such a dramatic lack of savings regardless of income level. For many, the more we make, the more we spend. Unless our craving to save becomes stronger than our craving for immediate gratification, we’ll be hard-pressed to end paycheck to paycheck

Savings benefits you can bank on!

According to a survey by Ally Bank, saving for the future makes people feel better because it helps them face the unknown, gives them peace of mind, makes them feel proud and gives them independence. These benefits outweigh fleeting happiness associated with buying the latest and greatest gadget.

The survey highlighted how saving money can have a significant positive impact on your well-being. Most people surveyed (84 percent) say having money saved up boosts their sense of well-being more than eating healthy foods, having an enjoyable job or getting regular exercise. Perhaps surprisingly, saving money also seems to affect happiness more than earning a big paycheck, since the impact of household income on happiness plateaus at about $50,000. In fact, the only thing better than saving on this survey list, is having good relationships with friends and family.

Ready for some good news?

You can save money even if you’re currently living paycheck to paycheck! To be successful, you’ll need to keep the long-term benefits at the forefront of your mind and have a target you want to hit and a strategy to keep you on track. Here’s our shortlist of things you can start doing today to help you save for a better tomorrow.

  • Set a realistic goal. Remember that 47% of Americans at every income level don’t have $400 saved. If you saved $1 per day, at the end of the year you’d be $365 richer and closer to breaking the $400 barrier. Can you trim $1 a day from your spending habits? Of course you can.

  • Start small. Don’t let this become another unfulfilled New Year resolution. Take small, doable steps until you’ve firmly established a healthy habit of saving. Think about if you were able to cut out one latte for your daily routine, quit smoking, eat out one night less each week, you’d have a few thousand dollars saved without giving up much.

  • Open a savings account and setup direct deposit. What if every paycheck you created an automatic direct deposit of $10 dollars? At the end of the year, if you’re paid bi-weekly, you’d have an extra $260 saved.

  • Pay with cash instead of a card. There’s just something about handing over cash that makes you want to hold onto it a little more. When you pay with plastic, it’s hard to see how quickly you’re spending.

  • Consolidate your bills. This one comes with a caveat … only if you don’t spend what you could be saving. Consolidating higher interest rate bills into one debt with a lower interest rate will lower your monthly payment. Funnel the money you save each month into your savings account.

  • Create a budget. Any budget item that is flexible can be trimmed. Think of creative ways to reduce flexible spending like entertainment, eating out, gifts, and travel and clothing expenses.

  • Sell stuff. Think about the things you don’t need anymore and sell it for cash that you can save. Local pawn shops, consignment stores, garage sales or Craigslist are great ways to sell your stuff. There are buyback programs for unwanted gadgets, such as smartphones or tablets. You can even reach out to your friends on social media.

  • Get support. Old habits can be hard to break. Sometimes you need friends to cheer you on, an advocate to lean on and financial education resources. Travis Credit Union offers everything you need to help you live better.

For a list of upcoming free financial education courses we offer, visit www.traviscu.org/seminars, Signing up is easy! Click on the seminar you would like to attend and fill out our simple registration form.

Ready to develop a Crave 2 Save in our community? You can help end the cycle of poverty and inspire others to break the $400 barrier. Visit www.traviscu.org/crave2save today!

 

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