Budgeting

8 tips for breaking the cycle of living pay to pay

Almost half of all Aussies spend the entirety of their wage, according to a whitepaper produced by MLC.

You might think this is unique to those with low incomes, but surprisingly, one in four (27%) households earning $150,000-$199,000 also confessed to living pay to pay.

Even more shocking: one in five (22%) of those earning $200,000 or more are still living pay to pay.

It seems regardless of where you sit on the income spectrum, finances can be a struggle. So how can you stop living pay to pay? Below you’ll find our top tips to help you finally break the cycle and set yourself up for a brighter financial future.

Know where your money goes

Whenever someone talks about getting their finances organised, the most common tips are “make a budget” and “track your spending”, and for good reason. If you don’t have any idea where you’re currently spending your money, it’s impossible to be able to make cutbacks and changes.

Many banks now have features that categorise your spending and show you where you are spending most of your money. Tracking your spending doesn’t have to be high-tech, and can even be as simple as writing everything down in your phone or notepad for a month. Once you do this, you’ll be able to see where your biggest spending areas are. These are the ones you need to look at cutting back first. 

Get comfortable saying “no”

Paying attention to your finances and trying to save money will mean that you’re going to have to learn to say “no” to things you may have otherwise done, such as a holiday or going to a concert. Cutting back on these unnecessary expenses is a temporary measure, though, and takes sacrifice and commitment. 

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