How to end the ‘payday to payday’ cycle

Feel like your wage is already half spent before it even hits your bank account? Constantly crossing the days off your calendar in anticipation for your the next pay? You’re not alone. Unfortunately, living in the ‘payday to payday’ cycle is a burden that many young Australians carry. At best, it’s almost exhilarating to see how far you can stretch that last $20 in your bank account. At worst, the idea of ending up in a perpetual circle of struggling to pay off debt, saving and living day to day can become a dark cloud over your head. What if we told you it doesn’t have to be this way? We’ve put together a few simple tips to help end the cycle and improve your financial street cred at the same time.

Cut up your credit card

Ask yourself – do you even need it? What are you using it for? Too many of us are living beyond our means, telling ourselves it’s just one more swipe, one more dress, one more dinner out with friends. Cutting up your card means cutting off access to the trap of spending money you don’t actually have. You’ll be forced to carefully consider your purchases and save for the things you really need. If you can’t bear the idea of shredding your plastic to pieces then store it somewhere out of sight. Even better, place it in a zip lock bag and freeze it in a container of water. If you’re tempted to use it, you’ll have the defrosting time to reassess how necessary your purchase is.

Stop paying interest

Banks are constantly offering 0% interest on balance transfers so use it to your advantage. Without interest weighing you down, you’ll feel like your repayments are actually making a significant dent in your debt. With most applications being available online, it’s easier to access than you probably think.

Reach for the stars!

Sighing away your whimsical dreams to travel the world because it’s just too hard to save? It’s easy to succumb to the notion that you’ll never be able to afford this, particularly when you literally just had to borrow $50 from your mum to buy groceries. Setting goals is one of the best ways to keep yourself motivated to stay on track with your spending and savings. Stick a picture of the Eiffel Tower inside your wallet to remind yourself of your dream trip to Paris before you buy another jumper you don’t really need. Give yourself a deadline to push yourself towards. Having a set timeframe will make it real and keep you mentally focused – “I’m going to France next March” is much more compelling than “I’ll go to France one day”.

Get organised

You saw it coming. It may be an obvious solution but writing a comprehensive budget is one of the simplest and most essential tools to help get you ahead. Open up a new Excel spreadsheet, enter in your income and outgoings in as much detail as possible and assess where you’re spending too much money. Find opportunities to cut back on expenses and adjust your budget plan accordingly. The trickiest part is sticking to it. Once you’ve completed your budget, make a commitment to follow it as closely as possible. On payday, pay off the have-to’s like your rent and phone bill immediately. Make sure you allocate an amount, even if miniscule, towards your savings. Watching your little lump sum grow over time will encourage you to stick to your budget. Don’t forget, it’s OK to treat yourself every now and then. But if you’re breaking the budget on a regular basis you may need to reopen your spreadsheet and give yourself a reality check. Try to remind yourself why you’re doing this by referring back to your goals.

Get creative

Being fiscally responsible does not have to equate to you becoming a shopping-deprived recluse. Think of it as an opportunity to get creative with your retail habits and social outings. Replace your weekly breakfast ritual at your local café with a take away coffee and a stroll. Host a clothes swap and movie night with your friends. Seek out the best happy hour deals in your local area. Go to the movies on cheap Tuesdays. Go for a half hour walk before impulse buying that new jacket – take this time to assess if you really need it in your life (you probably don’t). It’s all about creating financially healthier habits. Before you know it, making better financial decisions will become second nature to you. Your friends may even thank you for the inevitable surplus in their wallets resulting from your applaud-worthy influence.

The bigger picture

Once you’ve solidified your new financial habits and broken the dreaded payday-to-payday cycle, you’ll find yourself with greater ability to look at things in the bigger picture. Being financially flexible will allow you to start thinking about taking further responsibility for your future. Ideally, you’ll want to get to a stage where you can consider organising insurance or putting a little more into your Superannuation so that you can live it up when you eventually decide you’re done with the 9 to 5 routine – Think of this as the ultimate holiday of your life! It’s never too early to start preparing for it, because let’s face it – there’s nothing worse than being 30 years down the track and thinking “I shoulda, coulda, woulda” while seeing pics of your more organised best friend yachting around the Greek Islands. Forming good habits now can save you the hassle of playing catch up later on in life.

If you’re unsure where to start, getting financial advice can be your first port of call. NGS Super members are entitled to a free initial consultation with one of our dedicated and friendly Financial Planners.

Contact our dedicated customer service team on 1300 133 177 for all enquiries between 8am and 8pm (AEST/AEDT) Monday to Friday.

As NGS Super is a profits-to-members Industry Superfund, our financial planners work only on a fee-for-service basis – they don’t receive commissions or bonuses. NGS Super members are entitled to one free initial consultation with an NGS Financial Planner.

NGS Financial Planning Pty Ltd ABN 89 134 620 518 is a corporate authorised representative #394909 of Guideway Financial Services Pty Ltd ABN 46 156 498 538 AFSL #420367 and offers financial planning services on behalf of NGS Super ABN 73 549 180 515.

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