4 Tips To Stop Living Paycheck To Paycheck

by Connie Mei · 17 comments

edge of a cliff
One of the scariest financial situations to be in is living paycheck to paycheck. Unfortunately, too many people are in this predicament. According to CNN, 76% of Americans live from paycheck to paycheck. What’s even more surprising is that a third of Americans who earn more than $75,000 live this way as well. It’s a difficult situation to be in, especially when you have a family to support, and it can be mighty tough to get out of this rut.

Having savings to fall back on in case of emergency is important to everyone, which is why living paycheck to paycheck can be so dangerous. Any unexpected expenses can really complicate your life and create long term problems that make it more and more difficult for you to dig out of this hole. If you’re living paycheck to paycheck, consider these 5 tips to help you get on the right course:

Change Your Lifestyle

The first thing you need to do is to change your lifestyle, which is more of a mental change than anything. Being financially healthy is more than just skipping a couple trips to the mall or brown bagging your lunch. It’s a commitment to changing your habits and improving your life. You not only need to understand your long term goals, but you also have to want it as well. It’s going to be a long road ahead and if you’re not taking it very seriously, you won’t get very far.

Reduce Discretionary Spending

When you’re living paycheck to paycheck, you should drastically cut down on the luxuries. It’s OK to treat yourself every once awhile but not too often. Unfortunately, most of the discretionary spending will have to wait until you can get your finances back on track. That means only spending on things you need until your situation improves. You’ll have to cut back on your lifestyle significantly and your social life will take a hit, but you’re going to have to make sacrifices if you want to get out of this rut.

Earn More Money

You may have already cut back on expenses but still find yourself with nothing left over after every paycheck. In this case, your best bet is to find ways to earn more money. There are many simple ways to make extra cash, such as babysitting, dog walking, or running errands. If you have a skill that is in demand, you can put it into use, such as writing, graphic design, or coding. Many small-business owners started their companies as side jobs just to make extra money and honed their skills over time.

Stick to a Strict Budget

Make sure you have a strict budget and you stick to it. You might not need to track every little penny, but you need to know exactly where your money is going and whether you need to adjust if you’re living paycheck to paycheck. Track your expenses carefully and analyze your habits to see if there are ways you can cut back at the end of every month.

Have you ever lived paycheck to paycheck? If so, how did you change your financial habits?

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  • Chrissi says:

    One thing I used to do was to look for bargains (still do that!), and however much I saved on an item, I would put into a jar as my “free to spend as I like” money.
    It’s amazing how quickly the extra cents add up, and then you can treat yourself to a little “something” for being so careful with your money!

  • Ben@DebtFreeks says:

    Changing your mindset is super important. Even people who make good money can be living paycheck to paycheck based on their mindset. Taking a big-picture, longer-term perspective helps make smarter spending decisions. Building up that savings cushion a little at a time and staying disciplined is also vital to getting out of the earn-spend cycle. What I’ve found helpful is having the goal of being cash-flow positive every month – having more in the bank at the end of the month than I did at the beginning. Seeing progress is a huge motivator. Thanks for a great read.

  • James @BetaCashExpress says:

    A few years ago, I was living check to check. It was not a good feeling. A few years Ag , I started side hustling and was able to get back on track. I believe anyone can if they work hard enough.

  • Lawrence says:

    Thanks for sharing this post!
    As an employee, I have also tried to live from paycheck to paycheck, and I can tell that it was really stressful. It’s dreading to wait for the next payday just because you no longer have enough money in your pocket. Thanks to articles like this, I’ve came to realize how to be frugal and how to manage my personal finances well. I am happy to tell you that I am on my way of not living from paycheck to paycheck.

    • David Ning says:

      Great job Lawrence.

      Make enough baby steps and next thing you know you are already well on your way to financial independence.

  • Sassy Mamaw says:

    I’ve been there, not only paycheck to paycheck, but credit card to credit card. Two things helped a lot. First, having a small emergency fund. Just getting a few $$ between us and an emergency has helped a lot. Secondly, once we stopped using the credit cards to live on, as our payments went down, it opened up more money in our paycheck each month.

    • David Ning says:

      I’m so relieved to hear that you are heading in the right direction now Sassy. Never go down that credit card to credit card path again!

  • LateBoomer1 says:

    As a freelance writer by day and bass player in a cover band by night (pretty cool, huh?), I don’t live paycheck to paycheck per se, but in more of a “feast or famine” mode. During busier times of the year, I always make sure to get utilities and other “predictable” expenses paid ahead so I have a cushion for the inevitable slump times that occur due to seasonal demand (or lack thereof), etc.
    That said, I agree that changing one’s lifestyle and reducing spending is key when you’re living paycheck to paycheck. I’ve found it boils down to one simple rule regarding potentially expenditures: knowing the difference between “need” and “want.”

    • David Ning says:

      That’s so cool LateBoomer1. You are definitely a producer (producing music by day and literature by night!)

      And good for you to know how your industry works so you can save up when times are good and then use some of the savings during the down times.

      Being prepared is the key to success so you are on the right path.

  • Jess says:

    Yes looking at your finances and being realistic and honest with yourself about what you are spending money on is so necessary. Sometimes I find I need to give myself a wake up call to get back to good habits.

    • David Ning says:

      How do you know when you need a wake up call? I use my expense tracker myself, since I automatically start examining the details if the totals get out of whack.

  • Ramona @ Personal Finance Today says:

    Getting my small side business up and running really helped. It allowed me to pay off my debt and now work from home and earn way better than before.

    • David Ning says:

      Good for you Ramona.

      It’s amazing what hard work can do to your finances. Cheers for the additional income!

  • Travis @enemyofdebt says:

    Change your lifestyle is exactly right…..if you want different results, you need to make radical changes!

    • David Ning says:

      A commitment to changing your lifestyle is something you are very familiar with Travis. Just imagine your life before you started your site and before you started running. What a difference right? Keep making incredible changes and one day you’ll wake up radically different!

  • Financial Slacker says:

    I love the $5 meal plan idea.

    One area that has been killing us more recently is the increase in availability for delivered meals. I’m talking about the Grub Hubs of the world.

    Don’t get me wrong, I love the service and the convenience factor, but the cost compared to cooking a meal at home is probably 10x as great.

    And we seem to be falling into the trap quite often these days.

    • David Ning says:

      Do you rather pay for the convenience now or would you rather buy freedom that will happen sooner if you saved the money? Decide now so at least you won’t be surprised when someone else you know retires early and you are still struggling at the grind 🙂

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