It’s an accepted fact that around the 20th of the month everybody says, ‘Mwezi iko corner,’ whenever they are asked to pay for anything. It is at this time of the month that you start asking yourself why you overspent as you start counting down the days to payday.
This culture, of living from paycheck to paycheck, makes for bad financial health. It becomes impossible to have a regular savings plan or even pay cash for large purchases. You find yourself applying for all sorts of loans just so you can get through the last 10 days of the month.
Nevertheless, it is possible to have your salary, pay your bills, save and have enough money to last you up to and even after you receive your next paycheck.
Below are five ways to stop living from paycheck to paycheck.
1. Create a budget
The biggest mistake people make is living beyond their means. They end up paying for a lifestyle that they can hardly afford all in the name of keeping up with their peers. The best way to counter this is to create a budget before you receive your paycheck. Include your monthly expenses, debts to pay and amount you want to save that month.
2. Stick to your budget
When your pay comes, practice discipline and stick to your budget. Track your expenditure to make sure you know where all your money is going. There are many apps that can make this easy.
If you notice the money you set aside as “pocket-money” is running out before the month ends, make the necessary adjustments the following month. The key here is to make sure that your expenditure matches the amount of money you earn.
3. Reduce your spending
Any budget can be somewhat reduced. For instance, you can reduce the amount you spend on grocery shopping by buying in bulk. Use public transport instead of paying for cabs all the time. Instead, use cabs only when it’s absolutely necessary. Other places you can cut back are in entertainment and clothes shopping (do you really need another pair of shoes?).
Cut back on your spending a little bit every month and you will find you have more money to adjust your lifestyle, save and have an emergency fund.
4. Pay off your debts
In your monthly budget, set aside a portion solely for paying off your debts. The larger the amount you set aside, the faster you pay off your loans and the sooner you have more money at your disposal. Debts take up a lot of your salary. Imagine a life when you are debt-free, you’ll be able to spend more and save more.
5. Avoid getting into debt again
In the same vein, avoid taking any more loans. If you wish to purchase something that is more expensive than the money you have in your pocket, consider saving for a number of months and then making the purchase instead of taking a loan which will further inconvenience you in the coming months.
By following these simple steps you will find that by the time your next paycheck comes, you still have money from the previous month on hand. This will enable you to achieve your financial and life goals.