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Living paycheck to paycheck? Here’s how you can avoid debt

MANILA, Philippines – Nearly 70 percent of Filipinos have no savings. That’s what the 2015 National Baseline Survey on Financial Inclusion from Bangko Sentral ng Pilipinas found.

When you don’t have savings and rely heavily on your salary to cover your expenses, you naturally don’t have some cash to spare when emergency happens. The biggest tendency, then, is resorting to loans, which could worsen your financial situation in the long run.

If you think you’re part of the 70 percent, know that there are many ways to avoid getting into debt even if you are struggling with paycheck-to-paycheck living.

Be a smarter spender.

Have you wondered why you always struggle to make your cash last until the next payday? Is it really because your expenses are beyond your income? What if you’re just spending too much on a few things?

One way to stay out of debt when you’re living from paycheck to paycheck is to know where your money is going. What’s your biggest expense? Is it important? Can you cut it down? Are there some expenses you need to totally get rid of?

Take a good look at your budget to answer these questions. Perhaps, you need to say no to things that you don’t really need. Maybe you can let go of weekly eat-outs or cancel that cable TV subscription. If you're tech-savvy, you might want to control your spending on gadgets.

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You’ll need to make a few sacrifices for now so you can improve your money situation slowly but surely. This way, you won’t always have to turn to borrowing money for urgent expenses.

Make saving up possible.

You’re probably thinking it’s impossible to save money with all those expenses coming at you every payday. But you might be wrong.

You can start building your savings by opening a bank account that will serve as your piggy bank. Set a goal amount to save every month or every year then decide how much you should set aside every payday. If possible, have this amount automatically directed from your payroll to your savings account.

There are two important things you need to remember, though: One is you should secure your savings first before planning on your expenses. Second, commit to not spend your savings. Make it untouchable. Otherwise, your efforts will be pointless.

Earn extra money.

Check out these three ideas on how you can avoid turning to debt when payday is still far ahead by having extra cash:

Ask for a raise.

If you have been performing well in your workplace, you can be confident to ask for a raise. Just make sure to pitch a reasonable amount and be able to justify your request. In case you get a no, however, you can turn to the other two suggested options.

Find another source of income.

While finding a higher-paying job is a good action point, this route usually takes time. What’s more helpful in addressing urgent expenses is getting into a part-time job. There are several options you can find online and offline. You just need to be resourceful.

Moreover, your passion or hobby can also be a great money machine. Explore the possibilities.

Make an investment.

Keeping your savings in a bank account is good. But if you want to have more money in your pocket and eventually escape the so-called working poor lifestyle, consider making some of your money grow by making an investment. You can check out stocks, real estate or business opportunities, for example.

But here’s a little eye-opener: People who live from paycheck to paycheck are not always those who deal with low income. Believe it or not, there are some professionals who are earning quite well but still experience the same struggles of low-income earners.

So, remember that big income is not exactly the key to stay out of debt and escape the cycle of paycheck-to-paycheck living. It won’t be able to save you if you don’t take savings seriously, spend smartly all the time and make money work for you.

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