Credit union chief has 6 easy tips for families to break the 'paycheck-to-paycheck' cycle
Even affluent people are living paycheck to paycheck.
Getting out of the paycheck-to-paycheck cycle.
Rising costs in housing, groceries and financial services have Americans feeling the pinch. A recent study published by CNBC found that 62% of adults said they are living paycheck-to-paycheck, meaning their income covers their expenses without anything left over.
This financial stress isn’t just affecting lower-income people. Even those in higher income brackets are feeling the pinch, with over half of Americans earning over $100,000 having little to no money left after expenses.
When people are caught in the paycheck-to-paycheck cycle, they feel like they can never escape and get ahead. So Forum Credit Union Chief Operating Officer Andy Mattingly stopped by WTTV to share his 6 big tips to help people break out of the cycle and start saving.
1. Make an honest budget
The first thing you need to do is write out an honest monthly budget. Keeping track of every dollar you spend can be a real eye-opener and inspire positive changes in your spending habits.
Tips to break the paycheck-to-paycheck cycle
2. Stretch your dollars
This might mean looking for discounts and coupons and comparing prices, even on smaller purchases.
“We comparison shop, big purchases, cars and things like that,” Mattingly noted. “But we don’t think about everyday things that we buy, like going to the grocery store, things like that that you should look and make sure you’re buying them from the best place.”
3. Separate needs from wants
You may have to eliminate some luxuries from your monthly budget to break out of the paycheck-to-paycheck cycle. Subscription services are an easy way to deplete your bank account every month. Studies show the average American spends around $219 a month on various subscriptions.
“How many streaming services do you have,” Mattingly asked. “What type of Internet service do you have? What kind of phone plans do you have?”
4. Make a meal plan every week
Making a weekly meal plan can help streamline your grocery list to include just what you need. This way, you're not only avoiding the trap of buying too much but also saving money by not wasting unused food. It's a simple step that can make a big difference.
“The studies are if you do this you can save yourself about $75 a week on what you were throwing out that you don’t realize you are,” Mattingly said.
5. Look at loans
The next thing to look into is your overall loan situation and that means not just focusing on credit cards. Can you consolidate or refinance any loans to bring down your monthly payments? It's a great way to potentially ease your financial load.
“What we’re really talking about here is how can we put more cash in our monthly budget to get out of that paycheck-to-paycheck so we can start saving for some of these things,” Mattingly said.
6. Look at insurance coverage
It might be time to shop around for better insurance deals.
“If you’ve not shopped your auto insurance, your renters’ insurance, or your homeowners’ insurance, you’ve probably just seen it go up and you just think that’s what happens,” Mattingly said. “But you need to shop it every year.”
The overall idea of Mattingly’s advice is to take a holistic approach to your finances, whether that means changing your spending habits or looking at the deals you made a while back to ensure they’re still in your best interests. It may take a little time and effort getting to get things on track, bit it’s well worth it to break out of a cycle of financial stress.