Making ends meet, people try to provide themselves with necessities, and often even this isn’t easy to do. When you find yourself in a similar situation, you understand how difficult this lifestyle is: it is more like survival than life when you live from paycheck to paycheck. But every problem has a solution. Today we will share 5 steps you must take to get out of the vicious circle of poverty.
How to break vicious circle of poverty
Start with a budget
Have you faced such a situation that you could not remember where all your money went? Planning for future costs and budgeting will allow you to systematize spending and not spend money on unnecessary things.
It is necessary to save money to make an expensive purchase and create some airbags in case of an emergency, such as car repair.
Also, cost planning provides an opportunity to track the trend of expenses, which will reduce spending on unnecessary purchases. When you find products or services that don’t add value but pull money in, you can save money by removing them from your shopping list.
Find a way to earn more
If the current job does not bring enough money, and there is nothing to save on, then you need to find ways to increase your earnings. The first option is to get a second job, which will help you earn extra money. But the time for entertainment and rest will be significantly less.
Refresher courses can also help, where you will acquire new knowledge and be able to take another, more highly paid position. And, of course, the third option is a job change. If there is a vacancy where you will be paid more, the best option would be to get a new job.
Remember that life changes will only be beneficial. The main thing is to make all decisions wisely.
Learn to save
At the time of financial difficulties, saving money is a priority task. You can just set aside a certain amount as a safety net for a rainy day. This is the easiest way. You can also open a savings account with the ability to deposit money, but you will not be able to withdraw it during the selected period.
Try to look for various promotions, use services with cash backs – this is a real way to save money. And at some point, you will find that you can purchase with the returnable funds.
Also, when buying a certain product, make sure that you are purchasing it at the lowest price: today, many sites list prices for a particular product in various stores.
Stop using your credit card
If you want to stop living in debt, then stop creating debt. And the first step is to stop using credit cards. Just pop them out of your wallet and then block them.
Many people live and hope for this money, which does not belong to them; spend amounts that cannot be repaid in the future. Instead of constantly spending, start saving money. Let it be, at first, you have to tighten your belts tighter, but soon you will have formed the amount thanks to which you will gain financial freedom.
Get out of debt
In order to get rich, you have to deal with debts and hateful interest rates. Fortunately, the dashing 90s are not in the yard, so many owe the interest, not to the lads but the banks. Create a payment plan, find another source of income that will bring additional money.
Concentrate on paying off one debt, then move on to another. But do not try to embrace the immensity and promise all creditors a one-time payment that will get rid of debt unless you hit the casino or bought a lucky lottery ticket.
What to do after your financial situation improves
Always keep your budget in mind
Budgeting for a month is the best way to stay financially stable and not get bogged down in debt again. Once the financial situation improves, it may be tempting to stop planning and go over budget. But you shouldn’t do this if you want to maintain stability.
Don’t confuse wants and needs
We often get it wrong when we confuse desires with real needs. For example, food, water, a roof over our heads – these are human needs that we strive to satisfy. But expensive branded clothing, dinner at a restaurant, and the best Italian bathroom tiles are our desires.
You must soberly assess your capabilities and understand whether they are proportionate to your desires.
Find multiple sources of income
The best way to earn money is passive income, in which you receive money without much effort. You can rent out the premises if you have one or work freelance. There is also an option to get a second job. But remember about rest and accept the fact that free time will be much less.
Be mindful of unexpected expenses
Life is unpredictable, but you have to be ready for anything. We do not plan when to get sick, and going to the doctor can cost a pretty penny. Unexpected expenses will arise throughout your life, but you can prepare for them by forming an emergency reserve just in case of such “cataclysms.” A certain amount, which you can use only when in urgent need, should always lie “under the mattress.”
You may not spend it just like that, but you will know that you have a financial safety cushion for any emergency.