The vast majority of working Americans live from paycheck to paycheck, which means they have no money left over at the end of their pay period for unexpected expenses. This troubling trend can lead to many complications, some of which people can control and some they cannot.
While most folks would love to win the lottery, land a giant raise, or have all their debts forgiven, such things remain out of our control. How we spend the resources we have, however, can create a major impact on our financial stability.
As the saying goes, “A penny saved is a penny earned.” Fortunately, individuals at all income levels are capable of changing their spending habits and having more resources at their disposal to meet any challenge or need.
The potential pitfalls of living paycheck to paycheck
Most people can sympathize with the plight of the paycheck-to-paycheck household. After all, modern life involves countless expenses, and stagnating wages mean many incomes can’t keep up with the cost of living.
This very fact reinforces the need for many families to place tighter reins on their spending. Although individuals may believe they have enough to cover monthly bills, food, transportation, and other regular expenses, unexpected circumstances frequently throw a wrench into such plans.
Consider the prospect of such expensive “surprises” as:
- Medical bills. One trip to the emergency room can cost hundreds of dollars, even after insurance has covered its share of the bill. Extended illnesses present exponentially higher costs, easily carrying the potential to bankrupt families.
- Car repairs. When a vital motor vehicle breaks down, this prevents the owner from getting to work, going to school, or performing other necessary functions. Regardless of the circumstances, car repairs involve significant and immediate expenses that often run into the hundreds or thousands.
- Home maintenance. Malfunctions in plumbing, heating and cooling, and appliances within the home make for an uncomfortable (and possibly unsafe) environment if not addressed quickly and adequately. Hiring a professional – or purchasing replacement equipment – costs a great deal.
How to trim everyday expenses
Although this may be difficult for low-to-moderate income individuals – or people whose current expenses are high in proportion to their incomes – to believe, cutting back on everyday expenditures is possible for anyone.
“Many people don’t believe they can trim any more from their budget,” notes BankingSense.com editor Natalie Cooper, “but when they examine their bank statements, they realize there are some surprising places they can cut back.”
From a few dollars a day to thousands at a time, you can reduce everyday expenses by examining and adjusting where you spend the most. Money-conserving steps to take include:
- Save on entertainment. Fun is imperative for individuals at all income levels, but it shouldn’t break the bank. Borrowing DVDs or Blu-ray discs from the library, trading premium cable for web-based streaming services such as Netflix or Hulu Plus, and frequenting free community events will help those on budgets have fun without the high price tag.
- Make more meals at home. The web has resources that describe thousands of free menu planning tactics, many of which focus on low-cost groceries and quick preparation. Even the busiest household can benefit financially from brewing its own coffee, packing lunches, and eating out less frequently.
- Reconsider transportation. People who have long, congested commutes often experience significant savings if they switch to more efficient transportation methods, such as smaller vehicles, cycling, or public transportation.
- Avoid impulse buys. If “window shopping” presents too much of a temptation, find a new hobby! Canceling junk mail or marketing emails also helps consumers avoid spending precious resources on items they don’t need.
- Downsize. Although this may seem a radical move for many households, moving into a smaller house or apartment saves many renters and homeowners hundreds of dollars every month. It may be the right choice for “empty nesters” or anyone with more space than they regularly use.
Some of these changes may seem small, which might lead you to doubt whether they can actually help your household improve its circumstances at all. However, even a few dollars a day adds up to hundreds – or thousands – over the course of a year.
Think about which of these methods might be realistic and achievable for you and your family, and begin taking steps today to implement them. With a solid emergency fund in place, households can rest confident in their ability to face the unknown.