The car begins making noises and shuts off. You’re forced to visit a clinic because your child is running a high fever. You’re suddenly laid off.
What do you do?
These are troublesome times few Americans can handle due to their limited budgets. In fact, 49% of Americans are living paycheck-to-paycheck.
There’s no room for budgeting error. There’s certainly no room for the unexpected.
These events can (and will) happen throughout your brief time on this Earth. The question isn’t when it’ll happen… but how you’ll react.
Start by Cutting Back: Funneling Savings to Fuel Your Funding
You’ve been told time and again… you need a budget.
Debt and bankruptcy permeate all layers of our socioeconomic class. Some are bound for financial destitute because of their lifestyle choices. Others will see it unfold because of unexpected events.
Regardless of your position, here are a few tips for creating wiggle room in your budget:
#1: Lower the costs of basic necessities
Create a budget detailing all monthly expenses no matter how insignificant they may seem. Then, create two fields listing the company and contact for each.
Do either of these:
- Comparison shop service providers and suppliers
- Contact and negotiate better payment options
- Consolidate items and services into one
Use the Web to find alternatives and recommendations. The simple act of asking or switching is enough to save with every purchase.
#2: Embrace the coupon culture
Get into the habit of using coupons for anything and everything you plan to purchase.
- Rx coupons for most (if not all) meds
- $X off $Y coupons found in emails or on receipts
- Stacking deals with apps and in-store coupons
Trick yourself that you spent the full amount. But, set the savings immediately aside in a savings or investment account. This creates a great habit to avoid feeling you’re entitled to spending the difference.
It’s a tough pill to swallow when you’re adjusted to a particular lifestyle. Many will bury themselves further in debt to keep up appearances.
Where you can downsize:
- Selling unneeded items and getting into a smaller place
- Trading in a lease and going with an older, used car
- Switching from retail to thrifting for all your basics
Downsizing should pair with being patient. It’s holding out on immediate gratification for when it eventually goes on sale (because it will).
Handling the Unexpected and Lifting Yourself Out of the Paycheck-to-Paycheck Lifestyle
Budgeting and avoiding an emergency is one thing we strive for in creating stability. Yet, what are you to do when life hits hard?
- Lawyer Up. If you weren’t at fault for an accident or medical issue then exercise your legal options. Hire a lawyer willing to take on your case. Or find one that’ll take your case without compensation unless they win your legal battle.
- Build Skills. Develop work and career skills outside the workplace. Learning and practicing in-demand skills will keep your CV up-to-date in the event you’re laid off or fired.
- Reach Out. Local charities and institutions are willing to provide financial aid for those truly in need whether it’s covering a utility bill or for food. These programs exist for these moments; don’t feel ashamed having to rely on them if the time comes.
- Prenup. See marriage as a business agreement. Talk with your future spouse about the prenup option to protect both parties. Divorce can cause a financial mess. Get real about it.
- Fundraising. Seek small (manageable) loans from banks or cash advance businesses. You can also reach out to family members, or create a loan repayment agreement to handle the problem. Or, start a fundraiser using a crowdfunding app or doing it “old school” via a local meetup.
Many of these options will make you feel uneasy because you’re in an already vulnerable position.
Good relationships with friends & family and social programs are there for a reason… to help in times of need.
Retrace and Realign Your Financial Path
Use each financial downfall as a learning opportunity.
- Write a journal about why you think it happened
- Collect receipts and record the journey
- Talk with an advisor and work on the budget
Hopefully, it’ll be the last time you experience these problems. But, at least you’re prepared in case they were to happen again. With experience comes the ability to lift yourself from the paycheck-to-paycheck lifestyle (and more).