Creating some breathing room in your budget is beneficial for many reasons. Perhaps the most obvious is that having a little cushion in your checking account is helpful if an unexpected expense comes up. Without money to cover these costs, you may have no choice but to use credit. Once you begin the habit of using credit to cover these types of expenses, it can be difficult to break free. And, if you are spending money paying down a credit card bill, including interest, you aren’t using that money to pad your checking account. Of course, not everyone has a credit card. If finances have been tight for a while, you are young, or you have never built up a credit history, you may not even have a credit card to fall back on in case of emergency.

Lower Your Expenses

To stop living paycheck to paycheck, look for ways to cut your monthly expenses. Take a hard look at any subscription services you have and decide if they are necessary. Another option is to look at ways to cut your grocery bill. Switching to store brands and planning out your meals for the week so you buy only what you need are easy ways to cut your grocery spending without feeling deprived.

Another way to lower your monthly expenses is by refinancing your student loans. By refinancing your student loans with a private lender, you can lower your monthly payment and direct those savings to other budget needs. Refinancing is quick and easy to do online. It only takes a few minutes to see your rate estimate and learn how much you will save.

Developing a savings habit is an important part of stopping the paycheck-to-paycheck cycle. It is easy to feel like making the effort is not worthwhile unless you can set aside a significant amount with each paycheck. Saving even five dollars each pay period creates a habit. As you gain better control of your finances, you can increase the amount you save.

Kickstart Your Savings

Give your savings account a quick boost by taking on a temporary part-time job. Use the money from this gig to build up your savings account. Once you have a cushion, it is much easier to stay ahead of expenses. While taking on a second job may not seem ideal, it will only take a few months to build up your savings. Spend this time working on a budget, so when you stop working at the second job you are comfortably living below your means. This lets you keep your savings intact for a true emergency.

Develop and Use a Budget

Most people realize that budgeting is an important part of maintaining financial health. It is tempting to avoid making a budget when you know the numbers don’t add up. Rather than building a budget that is not sustainable, take smaller steps during the process. Start by tracking your spending. Don’t worry about cutting back initially, you want to get an accurate idea of how much you spend. After doing this for a month, look at where your money goes. You may be surprised at some of the areas where you could cut back.

Now, write up a budget that will cover all of your fixed expenses, such as housing costs and utilities. Include paying yourself, putting money directly into your savings on payday. Next, split the remaining balance into categories for groceries, entertainment, and other more flexible expenses. You can juggle these categories around as needed, spending more in one area, but understanding you will need to cut back in another.