More than half of Americans live paycheck to paycheck, finding too much month at the end of their money. If you’re ready to say goodbye to the endless cycle of "spend, survive, and repeat" here are some practical  steps to paving a brighter, more financially secure future.

1. Choose your why.

Without a why, a budget will quickly go bye-bye.

Why do you want to build savings? Why is financial stability important to you? Do you want more peace of mind to improve your health and happiness? Do you want to become a homeowner or maybe afford that dream vacation you keep talking about? Take half an hour to sit with a pen and paper and write out your why. Post it somewhere you can see daily to remind yourself of your why. 

2. Set up a B-word.

The B-word – budget – often leaves a sour taste in our mouths. After all, monitoring every dollar you make and spend is not much fun. Even so, financial stability without a budget is like a man on the moon without oxygen; impossible to sustain. To make your B-word more impactful and easier to take on, use the following three strategies.

Cut down on expenses where you can

Cutting out minor expenses and looking for better deals is important, but we spend most of our money on three simple categories: housing, transportation, and food. We need all three to survive, but adjusting each could save you thousands annually.

Housing:

If you’re renting, consider moving to a lower-cost area or an area closer to your job to cut your commute. Cutting down on your rental cost is especially important if you plan to save for a home. For those who already own a home, consider house-hacking. This is when you rent out space in your home for extra cash. You could rent out a room to another person or your garage for storage.

Check out other tips to lower your housing cost here.

Transportation:

Public transport is vital for getting around, but it isn’t always realistic. If you use your car to commute every day, consider trading in a gas-guzzler for a commuter-friendly car with lower or no monthly payments.

The average car payment in the U.S. today is between $500 and $725 monthly. If you can pay in cash for an older, reliable model and save hundreds per month, you are instantly done living paycheck to paycheck!

Food:

You can’t avoid buying food, but you can be more intentional about what and where you buy. Consider buying in bulk if you have the storage space, and plan and prepare your meals in advance (like these cheap yet delicious quick meals).

While drive-throughs may be convenient, save your eating out for special occasions that are worth the cash for the experience.

Pursue Extra Income

Financial stability isn’t always available by cutting expenses alone, adding an extra income stream can be a great way to get ahead of things. Consider:

·       Leveraging your experience and asking for a raise
·       Applying to other jobs with higher pay
·       Taking courses to gain skills that allow for higher-paying work
·       Taking on a side gig

Use Apps to Help You Track

Our phones are already glued to our hands, so we might as well make budgeting just as accessible. Download one of these apps to help you stay on track financially:

·       Mint
·       YNAB
·       Goodbudget
·       EveryDollar
·       Fudget
·       Honeydue

3. Start Saving

Once you start to see extra income in your budget, it’s time to start building your savings! The difference between living paycheck-to-paycheck and financial security is usually as little as 10% a month from your checking account to savings account.

Take Advantage of Free Money

Not all savings accounts are created equal. As of July 2023, there are plenty of high-interest savings accounts to pay you more every month. High-interest savings accounts are often online, but some brick-and-mortar banks offer them too. Look for rates of at least 2% to make your money work for you.

Automate Your Savings

The best way to save is to do so automatically. Set up automatic transfers on the day your paycheck hits every month so that you pay yourself something first – yes, even before you pay your bills.

4. Reduce Your Debt

Once you have a savings account in place it’s time to start paying off debt. We placed savings first because it’s important to start building your nest egg, even if it’s just a few dollars at a time, while you also pay off debt. There are a few strategies you can use when it comes to tackling the debt monster;

The Snowball Method

The snowball method is when you pay off the smallest debts first, getting in the habit with small amounts helps build momentum until your tackling larger amounts.

Avoid Big Credit Purchases

As you focus on fixing your budget, avoid big credit purchases – especially impulsive ones. If you have a large upcoming purchase, start saving for it in advance, and don’t buy it until you have the cash. Say goodbye to your credit cards until your debt has lowered and your savings have increased.

Consider Debt Consolidation

Debt consolidation is a financial strategy that involves combining multiple debts into a single loan with more favorable terms, such as a lower interest rate or fixed monthly payments. This can be done through a credit card balance transfer to a 0% interest card or a debt consolidation loan.

Final Thoughts

Breaking free from the paycheck-to-paycheck cycle is not an overnight transformation, but you can get it done with some determination and strategic planning. Small steps today lead to large leaps years into the future, so take charge of your finances now to have financial peace of mind tomorrow.