Around 46% of households are experiencing the stress of living from pay cheque to pay cheque, with no safety net of savings to support them. According to the ME Bank Household Financial Comfort Report for 2020, ‘only 32% of households indicated they could maintain their lifestyle for more than three months if they lost their income. While around 21% of households have less than $1,000 in savings.’
Most of us have most likely experienced this situation at some point throughout our lives. Whether it was in our student days, starting a career at the bottom paygrade in an expensive city or attempting to unburden ourself from debt. The fact of the matter is that life in Australia is expensive and wage growth doesn’t always correlate directly to our cost of living. It can feel so challenging to break through the cycle of living pay cheque to pay cheque and establishing yourself with better financial habits. We asked a few women how they managed to break the cycle and get out of that tight spot.
One lovely lady said, “If I want a nice bag or a big night out and had the cash, I’d buy or do it without weighing up the options. Life is for living and I can’t take money to the grave so I may as well spend it now…” But playing fast and loose with your income eventually shows its limits. “My mentality changed when I started to put myself and my future first. I changed when I realised that what I was doing wasn’t going to result in the life I deserved or wanted,“ she continued.
Another agreed with this change to her thinking: “The start was sorting out my priorities. Did I want that new dress or did I want to save my money? Shifting mindset from what I wanted right now to what I wanted long term.”
Regardless of any improvements to her lifestyle, one respondent said that she just continually tells herself the story that she’s broke, and “then I find that savings slowly accumulate.”
It certainly takes a bit of chipping away at the block to establish some savings and push past those uncomfortable limits. One tried her own strategy of “putting a percentage of earnings into a separate savings account each month. Calculating how much disposable income this left me with and then just living within my means,” she said, “I think when you start to realise how much you overspend and especially if you have a savings goal, you start to want to cut down on just throwing your money away and getting your savings up.”
In essence, it all comes down to lifestyle choices and prioritising. “The biggest lesson for me was being able to learn how to do things another way e.g. making coffee at home and buying the tools to make it how I like it and spend the money to do it properly…. I guess consciously making an effort to change my lifestyle, save money and still have the things I like.”
“I started keeping a spreadsheet of my spending years ago. That’s definitely made me more aware of my financial position month to month, so I can plan when to make big purchases and not run into trouble.”
From those who have lived in and broken through it, we hope the responses from this group of women can provide you with some inspiration and ideas for shifting out of that cycle.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regard to your circumstances.
