What is Month to Month Living?
You might have heard month-to-month living also called living paycheck to paycheck (pay period dependent).
This is a precarious and stressful position that many people all too often find themselves in.
If you are meeting (or in some cases not even able to meet) your monthly obligations and aren’t putting any money away in savings– you are living month to month.
Why Do You Need to Break the Paycheck to Paycheck Cycle?
Chances are if you are living month to month it’s because you either aren’t budgeting your money or you aren’t making enough money to cover your expenses.
So why do you need to break the paycheck-to-paycheck cycle? Because you are consistently walking the tight rope hanging over financial disaster!
If your car breaks down, you lose your job, you get hit with a larger than expected tax bill– you are in a situation where you may not be able to meet those expenses leaving you with few options to make up the difference.
Either you are forced to take on debt or do without. Neither option being desirable.
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How to Break the Paycheck to Paycheck Cycle?
Create a Budget. It’s important to know just how much money you really need every month. If you want to break this vicious cycle you need to start living below your means.
Track Your Spending. One of the best first steps to saving money is to start with knowing where it’s going.
For some people there financial situation isn’t an income problem so much as a spending problem.
Take a look at the last 4-6 months of expenses and see where your money was spent. This is will a great jumping off point when knowing where you can start cutting back.
Cut Back on Expenses. Once you know where your money is going and make the appropriate adjustments, you can start looking for other areas to start cutting back.
If you are looking for ideas on where to start, check out this list of over 60 ways you can cut back on expenses to put more money back into your pocket.
Limit Non-Essential Spending. You don’t have to commit to zero fun money (non-essential spending), but minimizing it until you get your finances in better shape would be ideal.
Budgeting, much like dieting, takes alot of discipline.
I find that allowing for some small indulgences makes it easier to cut back than cutting out everything all at once.
Know your REAL Bank Balance. Does this sound familiar? You go to the ATM, see that you have $200 in your account, so you withdraw some cash and spend yo’ money.
You know what your bank balance doesn’t show you? What has cleared from your account and what you still owe.
Money in the bank doesn’t mean you have money to spend.
If you want to get control of your finances and stay in control, you need to know exactly how much money you really have.
One of my favorite ways to manage this problem is with weekly budgeting.
Consider Moving to a Cash Budget. One of my absolute favorite things about a cash budget is that it makes it really hard for you to overspend.
When the money is gone, that’s it.
If part of your budgeting problem has been how to stick to it, consider (even if it’s only short term) switching to cash.
Side Hustle. When you are riding the money struggle bus, it might be time to consider adding some extra income into the mix.
Whether that is selling stuff from around the house, downsizing or finding another part-time job– all of these are good options when you need a large financial cushion and in a hurry!
Build up Your Emergency and Sinking Funds. Emergencies and unexpected expenses happen. Building up an emergency fund and sinking funds can protect you and your money from those moments and keep you from having to take on more debt.
Shed Your Debt. If you have debt you are throwing money away every month on interest.
Not to mention once those items are paid off, that’s money you can put back into your budget every month.
Final Thoughts on Escaping Month to Month Living
While living paycheck to paycheck might be your current situation, it doesn’t have to be your permanent one.
Why not take action, today. Help alleviate some of the stress of living in that precarious money space and into one with some stability.
The first course of action in moving yourself into a more secure financial situation is to take stock of where you are and where you want to go.
I’d love to hear how some of these action steps worked for you. Please feel free to comment below!
These are all great tips. A big one I think younger people definitely need to know is about side hustles. We can only cut our expenses so much, but income is (mostly) limitless if you know how. Even a one-day-a-week side hustle can go a long way. A good friend of mine drove for DoorDash as a side hustle to pay debt down faster.