First off, here’s a cool infographic on sample budgeting if one earns RM3,300 a month, with no dependents. The infographic is brought to you by CompareHero! Recently, they published my article on Bitcoin Debit Card Guide for Malaysians, so I’m returning the favour 🙂 It’s not hard, because I’m a big fan of their infographics in the first place.
Related: I wrote about my own actual monthly budget when I was earning RM3,500 a month.
Scroll down for infographic. My experiment on living paycheck to paycheck is under the infographic.
Nice infographic, no? It’s probably a lot of things you’ve already heard before. Cut out the non-essentials. Prioritise the essentials. Know the difference between non-essentials and essentials. (Note: if you can’t view it, you can check it out here)
The thing is, unless you are paying some high medical fees, you have no reason at all to be broke. Or live paycheck to paycheck. Or run out of money in the middle of the month.
Or so I thought, before my paycheck to paycheck experiment.
The paycheck to paycheck experiment
Ok, let me start this by disclosing my level of privilege. I have savings. I make ok money. Even if I lose that all, I have my family, who I’m 100% certain will be able to help me out. In the event that they can’t, I have friends.
The paycheck to paycheck experiment was not intended to end up as such, it was just me trying to maximise my savings during that time. It’s one of those ‘personal finance challenges’ that I like doing. I believe the full line was ‘Savings Hack! Pay yourself first! Put away half your salary and you won’t even notice it!’
Not notice it my foot. Here’s the full account.
The Challenge: For 2 months, I deposited half my salary into another savings accounts that I can’t touch
How it Went:
Naive me thought it was going to be easy. I sat down, opened my books, and listed the essentials. Rent. Bills. LRT cost to go to work. Groceries (capped it at RM50 per visit, 1 visit per week). Calculated them. Maths look good. I even had money left over for ‘fun’ stuff. Smiled to myself.
Not for long.
Emergencies kept cropping up. Work shoe needed to be re-soled. I underestimated the cost of groceries. Things break and needed to be replaced. It was the unexpected life costs that killed my budget for month 1. Even so, I stuck it out until the end of the month, telling myself that the next paycheck will make up for it.
Whatever hope I had, it got dashed. It didn’t get better. The beginning of month 2 was scrambling to pay off the balances from month 1. By the end of Week 1, I knew I have enough to pay for necessities but pretty much nothing else. Meanwhile, my shampoo was running out, my parents got annoyed at my many excuses to not come visit, and I was sick of mentally calculating my available account balances all the time.
I ended up ditching the plan in Week 2 because it was too stressful. I didn’t want to go to bed hungry. I didn’t want to be the tenant who pay late rents. Knowing that I didn’t have enough money to make it through 2 more weeks was mental torture. I myself promise to never live from paycheck to paycheck ever again.
can’t don’t want to break the loop or people who do this willingly. Doesn’t it get tiring to live with all that stress after a few months? Some people do it for years and I honestly can’t imagine it. I think I’d go mad.
Hidden expenses of being broke
That being said, I’m still glad I did the experiment, because I got to experience scarcity from a whole new level. This is by no means a full study, but I can broadly categorise the hidden expenses of being broke in 4 ways.
Firstly, there’s the obvious money cost to being broke. It costs more to be poor than to be rich. I didn’t want to exceed groceries budget, so I got the smaller but more expensive pack as opposed to that bigger but better value pack.
Then there’s the health cost. What do I go without, fish oil or chia seed (two supplements I take regularly). What do I downgrade – olive oil to vegetable oil, or honey to regular sugar? Can I make do with this kettle even though it almost electrocuted me? I feel stressed, I need this snack to make myself feel better.
There’s also a time cost to being broke. The time I spent worrying about money was time better spent doing other things, like looking for extra money. The thing is every single purchase required a thought because it can easily eat into the money allocated for rent. I worried about making the wrong purchase choices all the time, and not being efficient enough with my money.
Lastly relationship cost. During this time, I worried about the petrol cost to visit my parents, and ended up making excuses.
It was exhausting. Being poor is exhausting.
How to break the paycheck to paycheck loop
Many people get stuck living paycheck to paycheck and I greatly sympathise. It’s not an easy loop to break, but there are some ways to make it easier.
4 biggest expenses one usually have that keeps them in the paycheck to paycheck lifestyle: Housing, Transportation, Food, and Debt. Some or all of these needs major re-looking – how can it be cheaper? You might hear ideas like:
- Can you rent out a room, or get a roommate?
- Can you find someone or two to Uber with in the morning, and split the costs so its cheaper than LRT?
- Can you swallow your pride and say no to each and every eating out session and stay home with your brown rice and fried kangkung? (note: I don’t believe in instant noodles, they make you hungrier faster)
- Can you sort out your debt and use your savings to pay off the ones with ridiculous interest rates?
Please note that it’s so easy to advice, but hard to do. I don’t even claim I know how to solve this. I never had to.
It would be really interesting to hear from those of you who did manage to break out of this paycheck to paycheck loop. What worked for you? Please comment for the rest of us to learn from.