There is nothing more depressing than seeing your ATM account bone-dry a few days before paycheck. The moment you see that your account has zero balance, you are limited to certain moves until the next payday. Worse, you may be forced to borrow money just to cover your expenses. These events can further spiral down to a bad financial habit. With this scenario haunting a lot of Filipinos, how can we recover from our bad financial habits and stop living from paycheck to paycheck? Here are a few tips on how to get out of the endless cycle of going through one-scratch, one-peck every month.
Monitor the “little things”
Some people think that small expenses aren’t worth noting, since our perception of these small items is that they will merely dent our monthly budget. On a larger scale, however, these small but frequent expenses can actually severe impact on your budget. For instance, a cup of coffee from your favorite coffee chain everyday may seem harmless on your monthly allowance, but stretch that expense to a month and you’ll how it affects your budget. Although we’re not saying that you cut the caffeine, try to evaluate how these seemingly small expenses affect your overall budget.
Create a budget—then follow it religiously
Some people dismiss the idea of creating a budget because they think that they won’t be followed, anyway. That in itself is a huge problem, since they are already dismissing the positive effects of having a monthly financial plan to follow. Creating a budget allows you to put your money into perspective and allocate it before it even gets out of the cash machine. Think of your paycheck as water: it’s shapeless and directionless until you make it follow a certain direction, which should be your monthly budget. However, make sure that you follow it up to the minute details, or else you will stumble again back to living horribly from one payday to the next.
If you have multiple credit cards, ditch the others and leave only one
It’s easy to rely on credit cards to cover your expenses if you run out of cash, let alone numerous credit card. Features such as zero-percent interest and floating period make it easier for people to (mis)use credit cards. While it is tempting to use your cards in case of emergency, keep in mind that having more than one credit card will just tempt you to swipe more than you are capable of paying. Dependence on credit card will only worsen your financial situation. Keep in mind that every purchase using your credit card is as good as debt, and having debts mean additional cuts in your monthly budget. Use your credit cards wisely—as means for convenient cashless payment—rather than emergency funds. Just keep a single credit card for emergency purposes and cut off the others.
Make some lifestyle changes
Do you love eating or drinking out? Then your nights out may be the reason why you constantly run out of funds. Sometimes, our excessive lifestyle is to blame for our paycheck-to-paycheck lives. New gadget? Buy it as soon as possible. Friends asking for dinner out? Go to the most posh restaurant in town. While we are in no way discouraging you from living the good life, make sure that you are not spending beyond your means to the point of compromising your basic expenses. Alternately, there are other options such as cooking at home, staycation, and other activities where you can still have fun without spending too much. Keep your lifestyle in check and you can stop the ruptures in your monthly budget.
Change the way you look at your money
Although there are times that people need to make changes to the way they handle money, sometimes the problem is with the mindset and attitude when it comes to money. Sometimes, changing perspectives can really make huge shifts. For instance, if you don’t value money, then you will have no problems spending money mindlessly, hence leading to financial mismanagement. Putting it into perspective can really create a difference, especially if you put a premium to the way you allocate your budget. Change the way you see money and others will follow.
It may take time to go out of the vicious cycle of living from paycheck to paycheck. But with the right mindset, sheer willpower, and the audacity to make huge changes in the way you handle your finances, you can turn around your finances for the better and finally achieve financial freedom.