Everyone looks forward to payday, but for some, the excitement is tied more to being able to make rent than the gratification of a job well done. Living paycheck-to-paycheck is something that most people go through at one point or another (half of Americans find themselves in such a situation), and it can be a difficult cycle to get out of. With a little bit of effort, though, you can take control of your paycheck and stop stressing out about your financial responsibilities—even on a relatively limited salary.
Tired of worrying about your paycheck? Here are a few things you can do to protect your money and secure your financial future.
1. Set Spending Money Aside
One of the biggest misconceptions about being financial responsible is that it’s important to stop spending money on things you enjoy. Cutting spending “cold turkey” can feel great at first, but it’s not sustainable to deprive yourself of fun and entertainment. Spending money isn’t inherently bad—it’s losing track of how much you’re spending on things like hobbies and dining out that can be a problem. By putting a set amount of spending money aside each pay period, you can practice discipline without the risk of eating into your paycheck.
2. Pay Your Bills First
If you’ve ever had to wait until the last minute for a check to arrive before you could pay your rent, you know how stressful a scenario like this can be. We often create this type of situation for ourselves, and in many cases, it’s easily avoided. Every time you receive a paycheck, take a close look at the bills you have due within the next 20-30 days, and pay as many as you can without coming up short—the peace of mind alone is worth it.
3. Consider Disability Insurance
No one ever expects to encounter a disability; many even believe injury is the only cause. But the fact is, 90% of disabilities are actually a result of illness, such as cancer or musculoskeletal disease. Accidents only account for a small percentage of cases, and while playing it safe may seem like a good way to avoid the threat of a disability, there are absolutely no guarantees in life. Since only 50% of Americans would be unable to make ends meet after going just one month without a paycheck, there’s good reason for considering disability insurance.
4. Take Advantage of 401(k) Matching
When you’re struggling to keep the lights on, retirement is likely to be the last thing on your mind. But ignoring the future just because you’re living in the present is a risky tactic, and retirement planning is something that people in all financial situations need to consider. If your employer offers a 401(k) plan with matching, you should do everything possible to contribute the maximum that a match will be allowed for—often 4% of your paycheck. Why? It’s free money, and it helps secure your financial future.
5. Build an Emergency Fund
Just about everyone knows emergencies can arise, but how many people actually focus on creating an emergency fund? 60% of Americans lack enough savings to cover a $500 emergency, which doesn’t even take into consideration major, costly scenarios. Building an emergency fund to cover one-to-two-month’s expenses can take time, willpower, and a whole lot of budgeting, but it’s a crucial part of safeguarding your financial health.
That paycheck? You earned it, so don’t take what you do with it lightly! Focus on building new habits, and watch as your financial stress begins to melt away.