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The Simple Strategy to Stop Living Paycheck to Paycheck and Save More Money

With inflation and higher interest rates affecting people’s wallets, too many Americans are living paycheck to paycheck.

According to recent research from Lending Club, 62% of adults in the U.S. report living paycheck to paycheck and don’t have any money left over after they pay their monthly bills.

In my new book, Bounce Back: The Ultimate Guide to Financial Freedom, I show people struggling with money issues how to reset their finances.

If you want to stop feeling broke – and break out of the stressful cycle of living paycheck to paycheck – you can’t keep doing the same things and expecting different results. 

You have to switch things up by changing your spending patterns. Fortunately, there’s an easy strategy to do this that’s remarkably straightforward.

What’s this simple strategy? I call it my ‘switch and save’ technique. Just swap out the more expensive things you’re already buying for cheaper alternatives. Making this painless shift will save you money and curb overspending.

Need some ideas to get started? Here are 10 things to switch up and increase your savings: 

Switch #1: Prescriptions

According to data from the CDC, 60% of Americans take prescription medicines, spending an average of $1,200 per year. You can slash this cost by 70% by switching from brand name to generic drugs. And don’t worry: You’re not sacrificing your health. By law, generics must contain the identical active ingredients as brand-name medications. The only difference is the price tag. Making this one easy switch could save you $840 per year.

Switch #2: Groceries

Packaged, processed foods at the grocery store cost about 25% more compared to buying basic healthy ingredients. Swapping out pre-made frozen meals and packaged snacks for whole foods like grains, proteins, fruits, and vegetables could save a family of four around $1,500 per year.

Switch #3: Phone Service

Most Americans buy a new phone every two or three years. Instead of purchasing a $1,000 smartphone, switch from regular post-paid phone service to a prepaid phone. Straight Talk Wireless has affordable prepaid phones and no-contract plans as low as $25 a line. Swap into their family plan for the best value and save $960 a year.

Switch #4: Your Credit Card

Credit card interest rates are currently averaging above 20% in 2024. Don’t pay hefty interest rates and stay in debt longer than necessary. Switch cards by doing a balance transfer and taking advantage of a 0% APR credit card deal. If you owe $10,000 on your credit cards, you’ll save $2,000 in interest just by swapping into a 0% credit card deal that lasts for 12 months. CardRatings.com is a site that reviews credit cards and shows you the best offers, including my credit card recommendations.

Switch #5: Childcare

Childcare is a major expense. Daycare costs over $10,000 a year; nannies run $20,000+ annually. Slash childcare costs by doing a nanny share with a local family. A nanny share is when two or more families “share” a nanny by employing the same caregiver for their kids during the same hours. This lets you split the cost of the nanny. This one move could put $5,000 to $10,000 or more back into your budget per year. Check Facebook and neighborhood groups to get started.

Switch #6: Clothing

Instead of chasing expensive fashion trends from designer brands, stick to classic styles from stores like H&M or Zara. You can find quality pieces for a fraction of the cost. The result: instead of dropping thousands of dollars annually on designer goods – including things you probably won’t often wear – save $1,000 or more each year on apparel by focusing on value items and favoring lesser-known or store-brand clothing.

Switch #7: Housing 

Admittedly, swapping the place where you live is an idea that requires the most effort. But downsizing to a smaller home or apartment or a less expensive neighborhood could save you hundreds per month. Even just moving 15 minutes farther away can often provide significant rental or mortgage relief—your Savings: $200 to $500 per month or $2,400-$6,000 per year.

Switch #8: Internet Service 

Cut your home internet bill in half by calling to negotiate a better rate or switching to a budget provider. Low-cost plans typically start at around $50 per month—your Savings: $30 to 60 per month, or $360 to $720 per year.

Switch #9 Auto Insurance 

Have you shopped around for lower auto insurance rates recently? Just switching to a different provider can often save you 30% or more per month. Even if you don’t switch insurers, consider switching your car insurance deductible by raising it. That will save money, too—your Savings: $40 to 80 per month or $480 to $960 per year.

Switch #10: Eating Out

Plenty of us eat out – often more than we should. Many restaurants pile the food on, affecting your waistline and your wallet. An easy swap: split an entrée. Instead of getting separate plates, split one entree to save about $15 to $25 per meal. You can supplement with a side salad or appetizer if you’re still hungry. Over a year, a couple can save $1,000 or more with this strategy.

By swapping out the ten budget-busters listed above for their more affordable alternatives, you could easily bank over $10,000 in savings annually. 

That money can be used for an emergency fund, debt payoff, or investing for the future so you no longer have to live paycheck to paycheck. 

The small effort to make these easy switches is worth it for the peace of mind it will bring.

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