2670: Break the Paycheck-to-Paycheck Cycle and Start Saving by Vicki Cook and Amy Blacklock of Women Who Money

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[00:00:56] unlimited possibilities. This is Optimal Finance Daily, Episode 2670. Break the paycheck to

[00:01:05] paycheck cycle and start saving by Vicki Cook and Amy Blacklock of WomenWhoMoney.com. And

[00:01:13] I'm your host and personal finance enthusiast, Diana Merriam. For now, let's jump right into

[00:01:19] our next post and start optimizing your life. Break the paycheck to paycheck cycle and start

[00:01:28] saving by Vicki Cook and Amy Blacklock of WomenWhoMoney.com. You're not alone, but being part

[00:01:37] of this crowd isn't comforting and it makes sense when you look at the statistics. Just a few

[00:01:42] years ago, about 60% of Americans reported having less than $1,000 in savings.

[00:01:48] And a full 20% admit that they had nothing saved at all. Let those numbers sink in. More than

[00:01:55] three out of four full-time workers admit to living paycheck to paycheck. Living this way

[00:02:02] is a frustrating reality for many women. This is a serious problem, but don't give up hope

[00:02:08] even if you've lived this way your whole adult life. Here are five things you can do to break

[00:02:14] the paycheck to paycheck cycle and take control of your finances. Number one, total your debts.

[00:02:21] When you have to spend a significant portion of your paycheck paying off debts, it's tough

[00:02:27] to get ahead. The paycheck to paycheck cycle is even harder to break if you're deep in debt.

[00:02:32] But the cycle will never end if you don't face the numbers and understand just how much

[00:02:37] debt you have. To total your debt, add up the balance on every credit card you have. Total

[00:02:44] any outstanding loans like student loans, car loans or lines of credit for furniture or

[00:02:50] appliances. And add in your mortgage if you own your home. Good debt is still debt.

[00:02:57] Number two, record your expenses. Mineless spending may be the reason you run out of money at the

[00:03:04] end of the month. While the occasional morning latte, lunch out or toy for your child in the

[00:03:09] checkout line may not bust your budget, mindful spending decisions matter as you work to break the

[00:03:15] cycle. If you haven't carefully tracked how much money you're spending, you might be shocked to

[00:03:21] see the total at the end of the month. Use a spiral notebook or try out tools like Excel or Google

[00:03:27] sheets. You can even use free apps to track where you're spending your money. Before you try to

[00:03:33] make any spending changes, record your spending for at least one month. When you know where your

[00:03:39] money is going, you can do something about it. Number three, make small changes. A recent

[00:03:46] MetLife study shows that almost half of the workforce reports feeling concerned, anxious or fearful

[00:03:53] about their money situation. And you probably feel this way too. Taking small steps to clean up a

[00:03:59] money mess can be a real challenge. But starting small can lead to big results.

[00:04:05] After tracking your purchases for a month, you should be able to find a few places where you can

[00:04:10] cut back even if it saves you just a few dollars a day. Maybe it's bringing your lunch to work or

[00:04:16] making coffee at home. Or it could be dropping takeout once a week. You might be surprised how

[00:04:22] quickly you could save 10 or 25 dollars a week, maybe a lot more. That money can then be used to

[00:04:28] start building an emergency fund and paying off your debt. After you've made a few small changes,

[00:04:34] you can take on new areas you've identified as problems. Consider things like changing cell

[00:04:40] phone carriers and reducing or eliminating cable TV. Make a call to your service providers to ask

[00:04:46] if you're getting the best deal they can offer. You might be surprised at how quickly the price drops

[00:04:51] if they're worried you might cancel service. Keep track of what you're saving each month.

[00:04:57] Even though you may not be able to save a big part of your paycheck right away, remember that

[00:05:01] you're making progress. Number four, start now and stop living paycheck to paycheck. Just start.

[00:05:10] Don't wait for a new week or next month and don't make taking control of your finances

[00:05:15] a resolution for next year. Take action now. Consider your tax refund or your next raise as a bonus

[00:05:23] to grow your emergency fund or to pay down big chunks of debt. Time is your friend. This is not

[00:05:29] a get rich quick scheme and there's no magic formula to follow. The more time your savings has

[00:05:35] to grow, the more quickly you can pay off your debts and build a cushion of money for emergencies.

[00:05:41] And number five, stay the course. It's incredibly frustrating to know that your paycheck will barely

[00:05:47] cover your regular expenses for the month but keep in mind that almost everyone gets trapped in the

[00:05:53] paycheck to paycheck cycle at some point so don't give up. Getting a clear picture of your

[00:05:58] financial situation will allow you to take control of it but it'll take time and patience.

[00:06:04] If you stray off course, just start again and ask for help if you need it. You matter,

[00:06:10] your future matters. Total your debts, record your expenses, make small changes, get started now

[00:06:17] and stay the course. You just listen to the post titled,

[00:06:25] break the paycheck to paycheck cycle and start saving by Vicky Cook and Amy Blacklock of WomenWhoMoney.com

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[00:08:20] Getting out of the paycheck to paychecks' slog is such an empowering step on anyone's financial journey.

[00:08:26] I think the first step is increasing your awareness around where your money is going now.

[00:08:31] The idea of tracking expenses might make you cringe, but it was game-changing for me when I

[00:08:36] decided to clean up my finances. The reason why it's so powerful is because you need to come

[00:08:42] up with a plan for how you're going to increase the gap between your income and expenses if you're

[00:08:47] ever going to break free from living paycheck to paycheck. And you can't come up with a plan

[00:08:52] if you don't have a sense of where you stand right now. Once you have a clear picture on where

[00:08:58] you're at now, you get to play the game of optimizing all your expenses. Where can you cut costs?

[00:09:04] Where are you spending money and not getting enough value from that spending?

[00:09:08] Well of course I think we should all prioritize saving and pay ourselves first. You can only do

[00:09:13] that when you live below your means. If you track every dollar and optimize all your expenses

[00:09:19] and there's still no gap that would allow for savings, you likely need to focus more of your

[00:09:25] efforts on increasing your income. I know it can be scary to take a deep dive into your finances

[00:09:31] and look closely at where your money's going. I have been there, but I would encourage you to let

[00:09:37] your curiosity be bigger than your fear or shame about this because you absolutely can put an end

[00:09:43] to the paycheck to paycheck cycle and it all starts with a willingness to take a look at the numbers

[00:09:49] with a can-do attitude. That brings us to the end for today though thanks so much for listening

[00:09:55] all the way through and I'll catch you tomorrow on our next episode where your optimal life awaits.