If you believe a casual Google search result, some 76% of Americans are living paycheck to paycheck. We’ve seen all sorts of stories like these: most Americans don’t have even $1000 in savings, half of all Americans have no retirement investments, that kind of thing.
Financial hardship is a bad place to be, but even worse is not knowing how to manage your money at all. While debt and lack of savings may be the result of poor money skills, they aren’t the core problem themselves. It takes a revolution of the way you think about your money in order to stop living month to month.
To better understand how to make this personal transformation, you’ve got to look carefully at where your money is going each month.
There are many people who miss out on savings each month because they are paying for things they don’t know they are paying for. This is more than the usual “buying stuff you don’t need” problem.
There are plenty of outgoing payments that, quite simply, evade the notice of many consumers. How does this happen?
Well, the modern world makes it possible in many ways. For one thing, there are lots of people who sign up for subscriptions and services that they end up forgetting about.
A classic example is cable. For every channel you watch, there are a dozen that you don’t. Many people don’t even use their cable at all, but they neglect to cancel the service.
This realization has spawned the cord cutters movement. If you have a tendency to live this way, chances are you have a lot of outgoing payments for services you don’t use.
There is another class of payments that are the result of fraud and deception. For example, in the United Kingdom, lots of different consumers were sold “Payment Protection Insurance” when they bought their home or vehicle.
As they signed the documentation, they didn’t notice that, within the dozens of pages of legalese, there was buried an agreement to sell them insurance against the possibility of missed loan payments.
This happened to thousands of people, costing them millions of pounds. You can Claim PPI fraud (in UK only) and get your money back, but only after fighting intense legal battles. It would save a lot more money to catch the problem early, or never make the mistake in the first place.
Once you’ve managed to get rid of these unnecessary payments, you will find that you have a lot more money to work with each month. You can even pay more money to your legitimate loans, like educational expenses or rent.
Cutting down on payments that you don’t need to be making is just one part of living beneath your means. There are so many other ways that you could potentially cut down on extravagances and luxuries, but removing completely disused services from your payment roster is the most important first step.
You’ll see a difference immediately. From there, move on to the payments you do control, but which cost you a lot more money than you probably realize until you take a close look.
Take action today, start budgeting and see where actually you’re spending and decide how to save on them.