Pathway to Financial Freedom

Most people in America feverishly  count down the days until they get paid. Broadly, the financial ground most people are  standing on is incredibly shaky because more than two-thirds of the population are living paycheck to paycheck. According to Colley(2012), a contributor for the Christian Science Monitor, 68 percent of the 30,600 people surveyed in a recent study conducted by the American Payroll Association said it would be somewhat or very difficult if their paycheck was a week or more late. This confirmed the fact that more than two-thirds of Americans are living paycheck to paycheck. The bottom line here is that living paycheck to paycheck is too dangerous. Just ask yourself this questions: Suppose your paycheck bounce or arrives late? Or suppose an emergency that will consume your entire paycheck suddenly happens? This will cause  the financial tightrope you are walking on to snap. You may then have to borrow money from family to keep from being evicted from your apartment or your car being repossessed. The message is clear: To avoid this from happening to you, you will  have to change something in your financial life. Here are a few tips that will help you to avoid living paycheck to paycheck.

Adjusting Your Attitude is Very Important

For many Americans, living paycheck to paycheck can be a lifestyle choice. This category of people  never got ahead because  they chose to ignore their  financial reality and live beyond their means. Generally speaking, creating a vision of what you could have in the future can make it easier to make better financial choices. It is sufficient to state here that by making a list of three important goals, you can change my attitude toward money. First, understand that paying off debts to improve your credit score means that you could one day own a home. Second, building  an emergency fund means that you could start saving for fun things like a vacation. Third, avoiding wasting money on little things you didn’t need also means that you can buy bigger things you did need later on. All these goals can help you change your attitude to money and expenditure.

Have A Savings-Friendly Budget

To meet your goals as well as realize your financial vision, you will need to have  a better budgeting system that would include every purchase you made in the month – like groceries, personal care products, dog food, and the little extras. You should also include putting money into savings. For instance, you can put 10 percent of your income into your savings account automatically. Just like rent or car insurance, this should be a part of your budget(Colley, 2012).

Track Your Spending

To avoid  running out of money every month, save every receipt for a month. Add it all up by purchase at the end of the month. You will be surprised to  realize you are spending far more than you thought. All of those $2 purchases here and there, running to the store to get one thing you forgot, or buying a pricey latte can be a death sentence to your budget.

Trim the Fat On Your Credit Card

Paying down your credit card debt should be your next goal after you get your spending under control and had some money set aside for emergencies. If you have a credit card debt of, say $2000,  you can  set a one-year goal date to pay it off by. To achieve this goal, you will have to trim some things you really don’t need or even use that often out of your  budget. Here are what you may need to  cut: gym membership, cable TV, magazine subscriptions, and so on. To compensate for this, you may have to start  watching movies in  Netflix, take your dog for a run every day(instead of going to the gym),  and read blogs. This way you will be able to pay off your  debt in two years. 

References

Colley A.(2012): Stop Living Paycheck to Paycheck: 5 Steps. Christian Science Monitor. Retrieved October 29, 2012 from http://www.csmonitor.com/Business/Saving-Money/2012/0929/Stop-living-paycheck-to-paycheck-5-steps