Living Pay-Cheque to Pay-Cheque

Does this sound familiar? Your salary has just landed in your bank account and you ‘celebrate’ by going to a restaurant that evening. You then buy that item that you’ve been eyeing for the past month and spend a little more on impulsive buys. After the 1st of the month, what’s left over has just been wiped out by all your debit orders. For the rest of the month, you end up using your credit card for other expenses. Next month this story will probably repeat itself again. If this is your reality, then you’re living pay-cheque to pay-cheque… and possibly one step away from financial ruin.

We’ve identified 6 Steps that will help you Stop Living Pay-Cheque to Pay-Cheque:

1. Pay Yourself First:

As soon as your salary enters your account pay yourself first. Sounds weird since it’s already your money? We all know that saving is important, yet very few of us actually do it.

Generally, if people do save they only do it at the end of the month – if there is anything left over. Instead, you should save first and put that money into an account which is difficult to withdraw from. You should ideally save at least 10% of your monthly salary, although the more you can afford to save the better! It’s tough at first but it will lay the foundation for the other 5 steps as well.

2. Create a Budget and Track your Expenses:

If you don’t know what you’re spending your money on you’re going to have problems.  We all have fixed expenses like rent/bond, insurance and car payments, which are the same every month but other like groceries and petrol might vary.

Prepare a budget of what your monthly expenses are – including your 10% payment to yourself. Whatever is left over can then go towards your luxuries and entertainment. There are several templates or mobile apps, which can help you set up a monthly budget and track your expenses. Watching every penny spent will make you think twice before making that impulsive purchase on a new pair of shoes.

Upcoming Course: Introduction to Finance for Non-Financial Managers

3. Get out of Debt and Stop using your Credit Card:

Debt is a topic on its own but for the purpose of this article let’s focus on the essentials. There’s two types of debt – short-term (your credit card) and long-term (a loan or bond). Interest on these items can you cost you quite a lot! The quicker you can pay off your debt, the less interest you pay and the more money you will have for other things.

So how do you get going? Focus on paying off the smallest debt (e.g. clothing account) as quickly as possible as the interest for short-term debts is usually very high. Once you have settled your smallest debt, the monthly amount you paid for it (let’s say it was R100 a month) must be allocated to the second lowest debt (e.g. your credit card). So, if you were initially paying R200 a month for your credit card, you will now be paying R300 for it instead.

Continue this approach with your remaining debts as it will create a ‘snowball effect’. Your debts will be paid off much quicker and you will pay a lot less interest as well! The final challenge is to prevent going back to old habits. Only use your credit if you can afford to pay it off as soon as possible.

4. Build an Emergency Fund:

We don’t ever plan for a rainy day (like an accident or even retrenchment) but life does unfortunately happen. Sadly, a lot of people are forced to use the dreaded credit card or even take out a loan to pay themselves out of trouble. This unfortunately just causes financial trouble.

Paying yourself first will build up your emergency fund. If something unplanned happens, your emergency fund will at the very least soften the blow and not put you in heavy debt.

5. Downsize your Lifestyle and Cut Back on your Spending:

Probably one of the tougher ones to do. Peer pressure, great advertising and impulsive behaviour are the often reasons why we buy things that we often don’t need. It’s important to enjoy your money but within reason. First make sure that you can save, cover all your essential costs, and reduce your debt before treating yourself (and not the other way round).

Downsizing your lifestyle doesn’t mean you can’t enjoy your life. It just means that you need to be more disciplined with your purchasing decisions. You might just be surprised how much extra cash you will have available at the end of the month if you do.

6. Save Your Increases and Save for Tomorrow:

Getting an increase is very rewarding but a lot of people tend to upsize their lifestyle. It’s okay to treat yourself occasionally but upsizing your lifestyle will just increase your spending and possibly your debts. Instead of spending your extra cash on new luxuries, why not add extra to your savings so that you can also ‘save for tomorrow’. The more that you pay yourself every month the better for your savings.

Once you have saved at least double your salary, you will have a nice ‘safety net’ to help you with any future emergencies. When you hit this mark, either continue adding more or look at spending this extra cash on long-term investments (like shares or a retirement annuity) to ‘save for tomorrow’.

Related: Learn from the Pros how to “Work Smarter and not Harder”at PACSA 2018

According to a survey from, nearly eight out of 10 workers (78%) live pay-cheque to pay-cheque. It’s a very scary statistic – especially if you’re part of it. These 6 steps can help you to turn your situation around and get into the 22% group who are financially secure. Of course, earning a high salary is great, but what will ultimately secure your financial health is your self-discipline and control that you have of your money.

If you want to learn valuable advice and easy techniques to become financially independent, then this year’s Professional Administrators and Secretaries Conference South Africa (PACSA) is an event you shouldn’t miss! A financial expert will be discussing practical tips and advice that administrators can realistically apply to save extra cash at South Africa’s annual premier secretaries and administrators event. All speakers are experts in their field, and their invaluable advice will help you with your professional development. PACSA 2018 will be held on 22-24 August 2018 at Sun City and is endorsed OPSA.


PACSA 2018


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