Tips to Avoid Falling Into the Paycheck-to-Paycheck Trap

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If there’s one lesson I learned in my first year working after college, it’s that it is really damn easy to spend all your money. In fact, most post-grads do just that. Finally, we have a real income and every two weeks we see that direct deposit hit. It’s liberating, really. Since it’s so easy to spend money, especially living in a city while paying rent, student loans, and having a social life, it can be pretty hard to save anything, let alone get ahead.

I was lucky enough to spend a few months after college living at home, and as a result I could create a buffer for my savings because I didn’t have any expenses except my train ticket. Obviously, not everyone is this lucky and most 22 year olds have to pony up $1,200+ a month for a crappy room downtown just so they can go to work. While I got a jumpstart, I did end up moving out about 3 months after I started working and learning first hand just how difficult it is to reach your savings goals while also maintaining a life. Expenses add up quickly, especially after a night out.

It’s Time to Get Back to the Basics

The simplest way to avoid falling into the paycheck-to-paycheck trap is to establish good spending habits and actually start keeping track of where your money is going. It’s funny though, because most 22 year olds would rather die than plug in how much they’ve spent on a Thursday night happy hour. However, establishing smart habits early on, and I mean as soon as you start working, will actually save you so much time and energy down the line you’ll thank yourself a million times over. Here’s what you can do:

Start Establishing Smart Habits

How you spend your money is the cornerstone to your success. Take inventory of where your money is going and determine if your spending is aligned with your priorities. Are you spending $150 a month for a gym membership you don’t use? Racking up a $100 bar tab 3 nights a week just to feel like trash when you get to work? Habits are formed when we recognize our priorities and start incorporating them into our lives. Next time you spend money and feel guilty about it, take note. These are the areas you’ll need to trim back on.

Create a Spending Plan You’ll Actually Stick To

We can’t figure out where our money is going if we don’t actually track it. This is where a spending plan comes into play, and it’s two-fold. First, we establish how much money we spend on all of our necessary expenses. This includes rent/utility, your debt payments (student loans ugh), any medical or prescription costs, and your food. Once you’ve established that, it’s time to establish your savings goal. Your savings goal is what you will be putting aside each month towards your emergency fund or other financial goal you want to work towards (for me, I am saving for a downpayment on a house or condo!). Once you’ve established your needs and your savings, THEN you can begin allocating money for fun stuff, like going out or shopping.

The reason it is so important to follow this pattern of saving first is because otherwise, you either won’t save or your savings will become your “leftovers.” This is how the paycheck-to-paycheck pattern begins, which obviously we want to avoid.

The Art of Prioritization

This part is critical, and goes hand-in-hand with where you allocate your money when you are creating your spending plan. Prioritization is how we decide what is important enough to us to spend our money on. When we first start getting paid, it is pretty easy to spend on things we don’t need or want, or just in the name of not missing out on doing everything our friends are doing. I could tell you a million times where I went out and spent hundreds of dollars just because my group of friends wanted to do brunch, or go shopping. Obviously, doing this sometimes is fine. But when it stems just because your friends want to go, and you don’t actually want to (or you’d rather do something else), that is when it’s time to learn The Art of Prioritization.

So how can you actually prioritize, and figure out what is important to you? I want you to start thinking of things that actually make you happy. What lights you up, or makes you feel like the best version of yourself? It very well may be going out all the time with your friends, and if that’s the case, then that is where you should be budgeting your money. But it also means other areas of your life (like a $100 gym membership, or your bathing suit collection, etc) may have to be trimmed back a bit. For me, I prioritize healthy groceries and dinners out with friends. As a result, I always make sure to allocate more grocery money than I’ll probably spend, and a little extra padding towards my going out bucket. Why? Because I always want to be able to say YES! to plans with friends, without worrying about money.

And what have I trimmed back to make sure I can focus on my priorities? Well first, rent. I have 4 roommates, which honestly sucks sometimes (even though they are very respectful and I am super lucky for that). But I save money on rent, I can double down on savings, and it motivates me to get out and about rather than hang around at home all the time. I also cut back on spending money at the gym, which is something I really used to prioritize. I’ve found ways to exercise outside, do more at home workouts, and incorporate more movement into my days. These are just a few examples of how I’ve prioritized areas of my life to spend more in the areas that light me up, and it really works! In short, stop spending money on shit you don’t like and don’t need.

Honesty Hour

Look, ending up in a paycheck-to-paycheck cycle can be crippling. If you’re reading this and are already stuck in that type of rut, there is hope. Be honest with yourself. Throughout my work with clients, I’ve learned that a lot of our less-than-ideal money habits come from a place of fear and denial of our current situation, and fear of the unknown in the future. There is fear around checking our bank accounts, checking or credit card statements, receiving bills and automatic emails about what our balances may be each month. The anxiety this can cause is crippling, and it can put us in a place of living in constant denial, that it “won’t happen to me” or that it will “never get better.”

At the end of the day, keeping track of our money can be challenging and hard. It isn’t fun to input how much we spent last night at the bar or on clothes because there was an Asos sale. But living in a constant state of stress and worry about money, whether we will be able to cover our basic needs if we are laid off or if that one dinner out is going to tip us over the edge, is also pretty damn hard. So I challenge you, choose your hard.

If you’re struggling to find your rhythm when it comes to spending and saving, take a step back. Take inventory of where you’re money is going and be honest; stop making excuses! Doing that now, while you are young and in an advantageous position will propel you on a path to money success, forever. Because establishing good habits now, saving now, and making small sacrifices now while you can, will set you up for life.

To Wrap Up

If you take anything away from this post, I want it to be the importance of avoiding the paycheck-to-paycheck cycle. The best way to never deal with it is to avoid it happening in the first place. While it may seem challenging to keep track of where your money is going, and daunting to really decide what is and isn’t important to you, it will establish strong money habits for life.

For some people, it may be harder to avoid falling into this trap simply because you don’t make a lot of money. But at the end of the day, even if you can only save $50 a month, that is better than nothing. It means you’re establishing the habit of saving, making it a priority and recognizing it’s importance, despite the challenges in your way.

Create your buffer. Make smart choices early on and save as much as you can as soon as you can. Having a buffer opens up so many doors down the line, because you know you can fall back on it if you absolutely need to.



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