7 Tips To Stop Living Paycheck To Paycheck

by Connie Mei · 16 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 a study done by LendingClub and PYMNTS.com, 64% of Americans live from paycheck to paycheck. What’s even more surprising is that almost half of Americans who earn more than $100,000 live this way as well. It’s a difficult situation to be in, especially when you have a family to support. It can also 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 seven tips to help you get on the right course:

1. 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 you won’t get very far if you’re not taking it very seriously.

2. 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 in a while 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.

3. 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. The good news is that once you start tracking your expenses, you will likely find money leaks you can safely cut out without even missing what you get from that spending.

4. Look for Ways to Save

There are literally an unlimited amount of ways to save. Sometimes, you may even be able to get a discount without changing your consumption at all. I frequently call my Internet provider to extend my new customer discount before it expires. Perhaps you can give them a call now to start paying less from now on. I also always make it a point to call the medical provider every time I get a medical bill. Not everybody does this, but some will extend a discount to you just because you asked. I’ve received a 10% discount a few times. One time another offered a 20% discount that saved me $150. The worst they can say is no right?

5. 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 whether it’s 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. Who knows? This may be the first step to building a thriving business down the road.

6. Start Saving

Any extras you have left need to be saved. Start a savings account, and then move on to an investment account once you have an ample emergency fund. It doesn’t matter if the leftovers are tiny. Save that $5 every two weeks. Heck. Save that dollar. Once you are in the habit of accumulating, it’ll be easier to increase that amount. The first step is always the hardest but the most important.

7. Make Savings Automatic

Consider taking savings further by automating it. Treat savings as an expense and just have it automatically transferred to a savings or investment account that you don’t touch. Out of sight, out of mind. This works elsewhere and it works for building wealth too. You won’t miss the money over time and the beauty is that you’ll find yourself with a nice financial cushion after a while.

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

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{ read the comments below or add one }

  • Arminius Aurelius says:

    When I joined the Navy in 1950 , my monthly salary was about $ 120.00 a month . I had the government automatically put $ 18.75 into a 10 year Savings Bond [ $ 25.00 ] That was done for 4 years . After the Navy I wanted to visit Europe for 3 months . [Bicycle and stayed at Youth Hostels ]
    I did not want to touch my savings , so I worked a normal 40 hour a week plus an additional 20 hour a week. [ 4 hours a day X 5 days ] for 9 months. I did that several times in my life . By saving money , opportunities arise numerous times in ones life [ stock market crashes , etc. ] When everyone else is selling [ at a loss ] I jump in and buy dirt cheap. I bought bankrupt restaurants [ poor management ] cheap over the years …. I had the cash . Bank loans are often necessary but the more cash you have , the less interest you have to pay. ………. Arminius

  • 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.

  • 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!

  • LateBoomer 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 @ MoneyNing.com 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 @ MoneyNing.com 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 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 @ MoneyNing.com says:

      Good for you Ramona.

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

  • James 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.

  • Travis @enemyofdebt says:

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

    • David @ MoneyNing.com 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!

  • 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 @ MoneyNing.com 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 @ MoneyNing.com 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!

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