5 tips to stop living from paycheck to paycheck

Are you stressed about not knowing if you’ll be able to pay your bills?

A March 2022 survey says that 63% of the people who participated said they didn’t feel they would ever reach some level of financial security. But you can change that if you act now.

Now is the time to stop living large and to start living within your means. Being buried in bills and bad debt is an option you literally cannot afford. Making the decision to change the way you live now and opening a savings account will pay off in the long run.

Consider taking these necessary steps.

1. Make a budget.

We generally have a ballpark idea of how much we spend every month, but it would help if you actually wrote everything down. Budgeting gives you a big picture of your finances, as well as the nitty-gritty of where you do put your money.

Keep track of your finances and you’ll realize that you are actually spending so much on Grab rides and taxis, or on that data subscription you don’t even use because you have Wi-Fi at home and at the office. Bottom line is financial awareness is key. Without it, you’d be hard-pressed to know how to change your current situation.

2. Look for more sources of income.

If your current job doesn’t give you a salary that’s enough to cover the basics, then you need to consider looking for a second source of income. You’d be surprised at how many online part-time jobs there are that you can easily take up to supplement your budget.

Supplement your salary with a side hustle. You can be an online English tutor for P100/hour (four hours/day, five days/week amount to P8,000/month), a freelance writer (at P2,000 to P3,000 per article), or a virtual assistant who takes in around US$900 or roughly P50,000 each month.

3. Cut back on expenses.

If your Grab ride costs twice or even thrice as much as your regular commute, it’s time to use public transportation a few days a week. Wake up early and save the Grab rides for important meetings and emergencies. Scaling down your mobile phone subscription will also do you some good. Most people don’t get to use all of their allocated calls, SMS, and bundled data anyway.

In this age of Netflix and other streaming platforms (which tend to be cheaper), is a cable subscription still worth it? To stop running out of money all the time, cut back on the things you spend on. Focus on the necessities: food, shelter, education for kids, utilities, and savings. Everything else should be expendable.

4. Get out of debt.

Pay off your debts as soon as possible and minimize borrowing after. Refrain from purchasing gadgets and appliances on installment basis. Not only do they put a strain on your monthly finances, but you also end up paying more in interest. Interest on debts take a big chunk out of your budget—that money could have easily gone to other expenses or to savings. Plan major purchases and travel ahead so you can save up for them instead of charging them to your credit card or taking out a loan.

5. Make savings a priority.

Setting aside money from your salary can be very hard when you barely have enough money for regular expenses, but it’s really about mindset. If you treat savings as a necessary expense that you have to “pay” no matter what, you’d have a significant amount of cash stashed in just a few months.

A good rule of thumb when it comes to savings is 20% of your take home pay. This money could be used for emergency spending, or to earn more money in the form of investments. Most financial experts would consider your finances healthy if you have six months’ worth of your salary saved up at any given time, and only then can you finally say that you’ve stopped living from paycheck to paycheck.

Once you are able to manage your monthly finances, consider getting insurance plans like FWD Manifest and Set for Life, both for protection and to grow your wealth. FWD All Set / All Set Higher, meanwhile, lets your money to work all over the world by investing in global funds.