Living paycheque to paycheque isn’t forever. It seems many of us are getting our debit cards confused with diamonds - research shows that around half of us have been leaving no dollar unspent month-after-month for the past three years.
A recent survey by the Canadian Payroll Association also found that around three-quarters of us working Canadians have failed to put away any more than a quarter of what we think we’ll need in retirement - which, incidentally, is a whopping $1 million for about half of us. That number, too, has gone almost unchanged over the past three years. What is going on, Canadians?
Blame it on the debt, we say. After all, one-third of us feel we are all but drowning in our debt (and perhaps even quite literally drowning in the pile of bills laying around unpaid in our living rooms) which, too, is consistent with data over the past three years. About one in nine of us don’t think we’ll ever be debt-free. We wonder - can collectors foreclose on a coffin?
We have a few tips to ensure we - and you - won’t ever have to find out. Here are six clever tricks to getting out of the paycheque-to-paycheque cycle faster.
6 tricks to breaking the paycheque-to-paycheque cycle
- Acknowledge it - but don’t accept it
If you don’t have any money set aside for savings by the end of each pay cycle, then yes - you are living paycheque-to-paycheque. For now. Not forever. Understand it to be a very real issue without accepting it as your final reality. Don’t worry. This is the hardest step. In fact, don’t even continue reading until you’ve tackled it. Seriously. Stop right now and tackle it. Done? Great. Let’s move on.
- Look at your expenses objectively
Do you think someone living on half your wages could afford your lifestyle? Certainly not - but they’d survive all the same. Imagine you had to see your wages cut in half - sliced right down the middle. What would you do? You’d likely be forced into giving up some of those fruitless buys you find yourself giving into each pay day, like sale items you don’t really need but want because look at the price of those things. We urge you - take a look at your savings account instead. Yes, you could save $5 buying five bottles of your favourite shampoo right now - but you could also physically save that $5 and, say, not wash your hair for a week. We won’t tell - we promise.
- Swap out “retail therapy” for “financial misery” in your vocabulary
We know - no one ever calls it the latter. No one would ever make any money that way. But it’s a far more accurate description. Shopping for the sake of shopping or because your boss threw a stapler at you or because your favourite character was voted off MasterChef will not make your circumstances better. It will, however, make your financial circumstances worse. Light some candles, brew a cup of tea, and meditate instead. Trust us - it’s more effective and more economical. As for your boss, we’re pretty sure you can file a human resources complaint about that stapler.
- Set up a forced savings plan
You can’t spend what you can’t see. Go all Houdini on your paycheque and set up a forced savings plan that will automatically make a portion of your paycheque seemingly disappear into thin air in sync with your payday. Don’t worry - it won’t have gone far. It will have only been automatically transferred into a savings account you’d likely feel too guilty to tap at a moment's notice. Make it just small enough to barely miss - but just large enough to make a difference. After a few months, try doubling it. If you can manage that, double it again. Double, double - and watch your funds bubble.
- Give yourself a deadline to have all your bills paid up
And better yet - make it publicly known. Research shows we humans respond better to deadlines than we do open-ended commitments. External deadlines are more effective than self-imposed ones no one knows about, but both are better than having nothing in place at all. If the reason you’re living paycheque-to-paycheque has anything to do with the amount of bills that have managed to pile up over the years, give yourself a reasonable amount of time to crush them for good. Having a deadline in mind will force you to abandon urges of reckless spending since, somewhere deep down, you know you can return to that behaviour once you’ve taken care of this urgent matter first. The best part: Once you’re all paid up, you likely won’t want to return.
- Make a drastic change
Just one should do it. Whether that means selling your car for a sizeable sum or downgrading your home to take advantage of hundreds in freed up cash at the end of each month, one big change could be the running start you need to take a fresh start with your finances.
Cut it out - for good
Living paycheque-to-paycheque doesn’t have to be forever - and putting these tips to good use can help make sure of that. You might not break the cycle overnight, but remember: progress makes perfect - and perfect is forever. We hope.