Living paycheck to paycheck sure isn’t easy. It means you are always running out of money, or scrambling to make ends meet until your next paycheck arrives. This leaves little room for the curveballs that life may throw at you, including medical emergencies, accidents, and other unexpected fees that could jeopardise your bank account.
If you’re guilty of that, you are not alone. However, this is probably not a situation you want to remain in.
1. Set a goal to work towards
To change your habits, you must have a strong reason. Start by motivating yourself with a long-term goal. Are you getting married soon? Purchasing a place? Or trying to retire by the age of 40? Use these situations to set a goal for you to strive towards. In order to achieve that goal, you will have to start saving up today. While these lifestyle changes may seem insignificant at first, small habits add up to build a better life for your tomorrow.
2. Keep track of your finances

With the cost of living higher than ever, it’s easy to overspend when you’re not keeping tabs on your finances. Things that were once considered luxurious have become today’s norm. Take for instance, a venti-sized latte at Starbucks was once considered a treat, but it could be your daily go-to drink today. If you’re spending approximately S$8.70 on a venti-sized latte every day, this amount could quickly add up to S$60.90 a week, $243.60 a month, or a whopping $2,923.20 a year.
In other words, if you find yourself starving for the last week of the month before your paycheck, you’re probably indulging in a lifestyle that you can’t afford. Expenses change from time to time as a result of your circumstances, so it’s important to know what you are currently spending on each month – especially when you have limited financial resources.
Start tracking your finances with Planner Bee, a personal finance app that helps you manage your money all in one place.
3. Make a budget

Making a budget and sticking to it are different. When you budget effectively, you should be able to handle all of your expenses comfortably and be prepared for any surprise expenses. A feasible budget should also leave you with some savings to let you deal with unexpected bills such as accidents or other live events.
If you are not sure where to start with budgeting, you can try the 50-30-20 rule. In summary, split your salary into three categories; 50% for your needs, 30% for your wants, and 20% for savings or debt repayment. This is not a prescriptive percentage and may not suit everyone but is a good way to start.
4. Look for a side hustle

Diversifying your income streams with a side hustle can be a good way to increase your income. If you have the required skills, you could take the opportunity to monetise it and even build your portfolio at the same time. Some possible options include F&B, retail and administrative jobs, internships and freelancing.
5. Clear debt

When you’re living paycheck to paycheck, being stuck in debt is something you cannot afford. When you’re buried in bills, saving money can be almost impossible – which is why it is crucial to clear your debt as soon as you can.
Make an effort to put aside some money every month to pay off your debt. This means paying off more than just the minimum sum on your credit card, student debt, auto loan, or other high-interest consumer loans. By doing so, your principal loan amount should decrease monthly, so you don’t have to pay as much interest.
6. Cut back on expenses

Cutting back on your spending can help free up money to let you get out of debt. Additionally, you can put that sum into an emergency fund. After paying off your debt, you will be able to have some savings and some extra cash to spend every month.
Start by doing a financial audit of your expenses, and find ways to cut back on almost every category – from food, entertainment to vacations. Saving might be difficult for you at the start, but you will gradually get the hang of it and become better at saving as you discover new ways to save.
Pro-tip: For a start, challenge yourself to spend S$100 less every month. Instead of eliminating one spending category entirely, try slashing expenses in different categories by as little as S$5 or S$10 a month. These will gradually add up, and you can try increasing your targeted savings the next month.
7. Start investing

It’s never too early or too late to start investing, even if it’s just setting aside S$1.
High inflation isn’t going away anytime, and investing is the best way you can protect your money. Investing early can be advantageous, since your investments will have more time to navigate the volatile financial markets.
Furthermore, investing early lets compound interest work its magic. Although the initial investment sum may not seem significant, regularly putting aside a sum of money for investment can accumulate a large amount over 20 years. To reduce your investment risk, you can diversify your portfolios and divide your investments into asset classes that are not correlated. Here is how you can create your investment strategy.
Break out of the cycle today
Other than the mental distress of having to constantly worry about money, living hand to mouth also makes it challenging for you to save for long-term goals such as purchasing your first house or retirement.
Break out of the cycle by making conscious financial choices about what matters to you, and structure your finances accordingly. Over time, you will find that money management comes effortlessly to you, and you can have more financial freedom to build the life you desire.