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I had mismanaged my finances over the summer and found myself with less than $100 in my bank account and living paycheck to paycheck. That was not the first time I lived paycheck to paycheck.
What does living paycheck to paycheck mean?
Well, to put it simply, it means that you are not able to cover your monthly expenses without waiting for your next paycheck. This means that you could never leave your job as your life literally depends on it.
In extreme cases, you may even run out of money for all your expenses and wait for your next paycheck in order to be able to pay for living costs again.
My experience living paycheck to paycheck
I lived paycheck to paycheck 3 times in the past.
2014 – I bought a $1 million dollar house
The first time, I had just bought a million dollar house (my mom forced me into it). I was also paying rent for an apartment I was living in in downtown Toronto at the time. Basically, my entire paycheck would go towards paying rent, mortgage, and then food. Those were tough times!
2016 – I quit my job to move abroad
My second time living paycheck to paycheck was when I first moved abroad to Switzerland. I had to say goodbye to my cushy job and salary and live the “broke student” life once again.
Luckily, I had a monthly scholarship stipend which covered the majority of my living costs. I was living “paycheck to paycheck” – waiting for these scholarship payments to land in my bank account – for months. I literally couldn’t afford to pay my rent without waiting for the scholarship money to hit my bank!
Finally, about 6 months later, I found a part-time job abroad and then I was able to save some extra cash!
2018 – I spent too much money
This summer, I spent wayyy too much money and didn’t follow my budget. It didn’t hit me that I was spending beyond my means until I ended up with $100 in my bank account! That was scary!
The reason that happened was partially because I had to move apartments and pay a huge rental deposit. But still! I should have had enough money to cover emergencies like this! I talk about that horrible experience in this post about living paycheck to paycheck.
How can you stop living paycheck to paycheck?
I’m happy to say that I am no longer living paycheck to paycheck! Here are the things I did and helpful tips that you can try!
1. Start a budget
I wrote a helpful post about how to start a budget. I love budgeting and I’ve been doing it for nearly a decade.
A budget is awesome because it lays out exactly how much income you’re earning and exactly how much your expenses are. By tracking these two numbers alone, you can gain huge insights into your spending habits and the health of your financial situation.
A budget can help you to reduce your expenses where you can. That way, you could stop depending on your paycheck!
2. Spend less than you earn
Starting a budget may seem hard, but sticking to one is arguably even harder!
The easiest way to stop relying on your paycheck is by cutting your expenses. By keeping you expenses lower than your income levels, you would then have money leftover for emergencies and unexpected expenses that come up. That way, you wouldn’t really have to countdown to your next payday anymore!
Such freedom! Such bliss!
Don’t forget to check out the following posts for inspiration on how to save more money:
- 62 Ways To Save More Money
- 10 Things I Stopped Buying To Save Money
- 16 Simple and Effortless Tricks To Save Money On Groceries
- 10 Simple Ways To Save Money This Summer
- How To Live Without Wi-Fi To Save Money
3. Build up an emergency fund
An emergency fund is exactly what it sounds like – a bunch of money that you saved up for a rainy day. For example, if your car breaks down, you would have an amount of money saved up somewhere that could cover the cost.
Building up an emergency fund requires that you spend less than you earn (see #2) so that the excess amount can be saved up, invested, and used whenever a real emergency comes up!
4. Stop using your credit cards
Debt is my least-favourite 4-letter word. Besides my mortgage, I have never been in debt before. And I’d like to keep it that way!
I used to be a BIG SPENDER. I’ve even had 5-digit credit card bills before! No kidding! I was addicted to designer handbags and shoes 🙁
Anyway, earlier this year, I decided to finally cut up all my credit cards and use cash only. And guess what? It’s reduced my spending by at least a couple hundred every month!
If you’re an impulsive buyer like me, then it may be a good idea to cut up your credit cards and use cash only. Without a credit card, it sure does it make it a lot harder to buy useless things and get into debt!
5. Start a side hustle
Lastly, I am proud to say that I’ve been side-hustling my ass off and it’s finally paying off. These days, I nearly cover all of my living costs with just my side hustles alone!
I started a blog and I’ve been earning $200-500 from it every month!
I also started selling all of my old stuff online to make some extra cash. I started giving English lessons and I even started offering personal coaching services!
Check out this post about side hustles to try!
Living paycheck to paycheck is an awful feeling. I have been there before and I never want to be there again. In this post, I talked about my experience living paycheck to paycheck and offered a bunch of tips on how to get out of that vicious cycle!
I wish you the best of luck with your debt journey!!
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