Have you ever considered what would happen if you didn’t receive your next paycheck? Would this jeopardize your home, or make it difficult to buy essentials? This can be a terrifying thought – especially if you’re among the 78% of American households living paycheck-to-paycheck.

Fortunately, there are steps you can take to break this vicious paycheck-to-paycheck cycle.

We get it: Changing your financial habits can be tricky – but believe us, the payoffs are well worth the hard work! Removing or reducing financial worries contributes to improved mental health and overall quality of life.And you will have more life options, like getting out of a dead-end job or investing in your dreams.

So let’s discuss how you can get started.

Step 1: Bring in more earnings.

Sure, it sounds obvious: You’ll rack up debt when you’re spending more than you’re bringing in.If your earnings aren’t enough to cover your expenses, you need to find a way to supplement your income. 

Consider a second part-time job or side hustle.Or if you feel like you’ve been putting in extra effort at your job and can justify your request, ask for a raise.

Step 2: Spend less.

Once you’ve begun to earn more, don’t see this as a green light to spend more.

Be sure to stash those extra earnings and ease off on the purchases.There are many methods to build your bottom dollar: Eliminate superfluous expenses like your unused gym membership, unread magazine subscriptions, and unwatched expanded cable.Limit your time at restaurants to special events only.

Keep in mind that cutting your spending is a habit that you’ll have to get used to.Like any habit, you’ll need the practice to make it a routine.

You’ll need to adjust your thinking – and maybe even make slight modifications in your life.For example, when you’re just starting out, take steps to remove the temptation to spend by unsubscribing from sales emails that encourage you to visit your favorite retailer online.

Step 3: Boost your emergency fund.

One of the scariest things about living paycheck-to-paycheck is not having the means to cover yourself in an emergency.Now that you have a bit more money flowing in – and less flowing out – take the opportunity to give your emergency fund some love.This fund is the backup plan that helps you avoid more debt so you will be able to pay for unexpected expenses. 

Don’t have an emergency fund? Start one today! The rule of thumb is to set aside 3 to 12 months’ worth of expenses – but don’t worry if you need to start small.

Set a goal of $500 or $1,000, and increase your goal when you hit your target.Even a small amount can safeguard your bank account when small emergencies crop up.As you free up more cash, put more money into the account so that you can reach your savings goal faster.

The key to remember is that this is an emergency fund.Except for deposits, don’t touch the account unless you’re paying for actual emergencies.

Tip 4.

Pay down your debt. 

If you’re trying to pay off debt, it’s hard to save much with each paycheck.You see most of your take-home money going straight back to your lenders.You need to get a handle on all your debts. 

Start by making a list or spreadsheet of everything that you owe to get a big-picture overview.Next, prioritize your debts in the order that you plan to pay them off.

(There are many different payoff strategies – such as the debt snowball, the snowflake, the balance transfer, and debt management – so you can find a method that works best for you to pay them off.) Then arrange to make extra payments whenever possible, rather than just once a month.Lastly, stick with it, and you WILL eliminate your debt!

If you’ve tried these steps and can’t break the paycheck-to-paycheck cycle, maybe it’s time for some personal financial advice.Please contact DebtGuru.com today, and let one of our friendly counselors help you find – and maintain – a solid financial footing.