Jaspreet Singh: How To Stop Living Paycheck to Paycheck in 7 Steps

Jaspreet Singh / Jaspreet Singh

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Living paycheck to paycheck can seem like a never-ending cycle, but it doesn’t have to be. With the desire to break the cycle, a solid plan and a commitment to consistent actions, you can dig yourself out of debt and feel more comfortable with your finances.

Here, we’ll break down money expert Jaspreet Singh‘s step-by-step plan for how to stop living paycheck to paycheck and build wealth. 

Be Prepared To Make a Lot of Sacrifices

Singh stresses that you’re going to have to make a lot of sacrifices to help dig yourself out of debt and start building wealth. He said that when you’re living paycheck to paycheck, it’s easy to feel hopeless and end up irresponsibly splurging on things like a luxury car or vacation you want. 

You have to be willing and prepared to make sacrifices and stop this behavior, however, or breaking the cycle of living paycheck to paycheck won’t happen. “The person that can get you out isn’t me,” Singh said. “It isn’t your parents. It isn’t your boss. It’s you — you have to be the person to dig yourself out.”

Save $2,000 as Quickly as Possible

Singh said once you decide you’re going to stop living paycheck to paycheck, you’ll need to save $2,000 quickly. He said this will give you a financial cushion in case something happens to interrupt your income flow, such as losing your job or getting an expensive speeding ticket.

“You want to make sure you have some money to fall back on so you don’t dig deeper into a financial hole when life happens …” Singh said.

He added that instead of waiting for things to happen, you should prepare for them by having money in savings, which will keep you from being under extreme financial and mental stress that comes when you don’t have money for unexpected expenses.

“You are in a financial danger zone if you don’t have $2,000 … stop going to the massages, stop buying the organic foods, stop doing all the expensive fancy stuff if you don’t need it to survive,” Singh said. “Stop spending money on it!”

Pay Down Your High-Interest Debts

Singh said carrying high-interest debts also puts you in a financial danger zone because the interest is so expensive that it can stop you from ever becoming financially secure. “If you have these types of high-interest debts, you are paying a lot of money to maintain that debt,” he pointed out.

Singh said you must take an aggressive approach to pay down debt. He said to stop using your credit cards immediately and only pay for things with cash or your debit card. He also said not to use the $2,000 you saved for your emergency cushion. Instead, find the money somewhere else. 

“You need to go out and put some extra cash together,” he said. “That way, you can pay down these high-interest debts. And depending on how much credit card debt you have, this could take you three months [or] it could take you three years.”

The important part is that you reduce high-interest debt to zero so you can start building wealth. 

Have Three Different Bank Accounts

Singh said the next step to break the cycle is to have three different bank accounts to help you organize your finances. He said to have one bank account for your emergency savings, another for checking and a third account for money to invest. He added that you need to have a plan for your income before you receive it, which is what wealthy people do.

Singh suggests the 75/15/10 plan, which means for every $1 you earn, $0.75 is the maximum you can spend, $0.15 is the minimum you can invest and $0.10 is the minimum you can save — no matter how much money you earn. Calculate and divide those amounts between your three accounts. According to Singh, following a plan for your money like this one will help you start building wealth.

Control Your Spending 

Singh said that to start building wealth, you have to understand the difference between being able to buy something and being able to afford it. If you’re buying things with credit cards or buying things with Buy Now, Pay Later apps — even if it’s 0% interest — you’re spending tomorrow’s income today.

Singh cautions against this, and instead suggested, “Buy things that you can afford, and buy them with cash.” The only exception he includes is if you buy a home, which is something that makes sense to finance.

Earn More Money

Another step in ending the paycheck-to-paycheck cycle is earning more money. However, Singh said it’s important to remember that earning more doesn’t mean you should be spending more. He said this sort of behavior can land you in a bigger financial hole than you were previously.

If you control your spending by following a plan like 75/15/10 and put the extra money you earn toward investments and savings, you’ll reach your financial goals much faster, Singh said. 

Learn

Singh said most people do not grow up with any sort of financial education about how to earn money, scale income or manage investments. Therefore, he encourages investing your time into learning. 

“Start with the free content,” suggested Singh. “Watch more YouTube videos on financial education, starting a business, earning more money or building that wealth. Consume different types of content even if it’s personal development or self-development.”

Singh also suggested reading books and taking classes to educate yourself financially, or investing in coaching if you can afford it without going into debt. Overall, he said you should continually invest your time and some of your money into your financial education because it will not only allow you to earn more, but it can also help grow and protect your wealth. 

The Key Takeaway

Singh said that taking action and consistently working toward your financial goals will be the key to your success.

“If you stick with this, I guarantee you, in 60 days, you’re going to start seeing that difference,” Singh said. “In six months, you’re going to be in a completely different place, and in six years, you won’t even recognize where you are financially. But it starts by taking that first step.”

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