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Here’s a serious question.
What would your finances look like if you could stop living to paycheck to paycheck?
Think about it.
When you live from one payday to the next, you don’t have a lot of control over your money. In fact, your money ends up running you most of the time.
And that, my friend, is stressful.
Because you’re working hard but you’re not getting ahead, even though you feel like you should be. And you most likely aren’t saving a dime.
I know what it’s like, believe me. When I was first married, my husband and I were flat broke. Like, going-to-the-food-bank-every-week-because we couldn’t afford groceries broke.
It was ugly. But I learned so much from that experience about how NOT to manage my finances.
And now my money situation is completely different and living paycheck to paycheck is a thing of the past.
So I thought I’d share a few pointers along the way that helped me break the feast or famine cycle with money.
How to Stop Living Paycheck to Paycheck (for Good)
So, the first thing I want you to know about being caught in a paycheck to paycheck cycle is that you’re not alone.
Almost 80% of Americans live from one payday to the next, which is just crazy to me. And it’s scary, too.
Because when a rainy day comes along (and one always does) you can end up having to use a credit card or loans to cover it if you don’t have emergency savings.
And that can just make your money situation worse.
That alone should be a huge motivator to stop living paycheck to paycheck and get your finances straight.
But I get that it isn’t easy. So I want to make this as simple as possible for you.
Sound good? Then let’s dig into the different steps you’ll need to take to get there.
1. Take Stock of What You’re Spending
If you want to stop living paycheck to paycheck and start saving, you have to know what you’re spending first.
So, grab a pen and paper or open up a new spreadsheet (you can grab a free budgeting and expense tracker in the Resource Library) and start adding it all up.
Now, break your expenses into three groups:
- Essentials = Money you need to spend to live.
- Debt payments = Money you need to spend to keep your creditors off your back.
- Everything else = Money you spend that doesn’t go to debt or essentials.
Under the Essentials category are things like your housing payment, utility bills and insurance. The Debt category might include student loans, a car payment or credit cards.
With essential expenses and debt, your monthly payment amounts don’t really change that much. Your light bill might be a little higher in winter or summer but overall, you pretty much know what you’re spending on those things month to month.
It’s the “Everything else” category that can make or break you when you’re trying to stop living paycheck to paycheck.
2. Figure Out Where You’re Wasting Money
Okay, so this is where things can get a little ugly.
If you’ve been spending without a budget then you might be completely surprised by how much money is going out each month.
That’s why I’m all about tracking your spending. It’s the easiest and best thing you can do to keep your budget in check.
(And remember, you can grab my free expense tracker sheets in the Resource Library.)
So, let’s look closely at what you’re spending each month. Break it up into two categories: needs and wants.
For basic needs, I’m talking things like:
- Internet, if you work from home.
- Cell phone service.
- Basic clothing and personal care.
On the wants side are the extras, like:
- Gym memberships.
- Streaming subscriptions.
- Eating out.
- Expensive hobbies.
- Online shopping.
- Bank fees.
From my own experience, I can tell you it’s the small things that get you in trouble.
A few dollars here or a few dollars there don’t seem like much. But if you’re trying to stop living paycheck to paycheck for real, those little amounts just work against you.
So you have to look at what you’re spending and be ruthless about cutting out the waste.
The free Trim Financial Manager can be a huge help with this.
Trim is a digital assistant that helps you save money.
It finds and cancels unwanted subscriptions for you, plus negotiate your bills and help you dodge hefty bank fees.
(And did I mention, it’s FREE to sign up? Can’t get any better than that. 🙂 )
3. Find Ways to Save More Money Every Month
Cutting out subscriptions or getting rid of bank fees is a step in the right direction for getting out of a paycheck to paycheck rut. But think about what else you can do to save more money.
Trying a no-spend challenge is one option. This is where you commit to not spending money on anything besides essentials for a day, a week, a month–however long you can stick to it.
If you’ve already trimmed down your budget, go back over your spending again to see where most of your cash is going.
Groceries and clothes shopping are probably a big part of your budget if you have a family. I know my grocery spending has grown steadily as my kids have grown.
Ask yourself what you can do to cut those expenses down. Some ideas you can try include:
- Switching to generic instead of name brand for groceries.
- Building your grocery shopping list only around what’s on sale.
- Meal planning so you have less food waste and only buy exactly what you need.
- Waiting for the end of season markdown sales to buy kids’ clothes for next year.
- Buying clothes secondhand at thrift stores or consignment shops.
- Hosting a clothing swap with some other moms.
- Using an app like Ibotta or Rakuten (formerly Ebates) to earn cashback when you shop for clothes online.
(And right now, if you join Rakuten using my special link you can earn $10 back on your first shopping trip!)
That’s a really short list of ways you can save some extra cash and stop living paycheck to paycheck. For more ideas, check out this massive pile of money-saving tips from PT Money.
4. Grow Savings Automatically
When it comes to saving money, I like easy.
If you’re getting out of the paycheck to paycheck habit, there are a few ways you can make saving super simple.
Set up direct deposit into savings
If you normally get paid via direct deposit you can have savings taken right off the top.
You can change your direct deposit payout to send part of your check to a savings account and the rest to checking. Usually, all you have to do is just fill out a new direct deposit form to your company’s payroll department.
If you’re brand-new to saving, it’s okay to start small when you’re trying to stop living paycheck to paycheck.
For example, you might have 5-10% of your check sent to savings at first. Then, you can see how easily you’re able to manage your bills and other expenses on the rest.
If you still have money left over each payday, you could bump up your savings rate a little higher.
Remember to account for saving in your company’s retirement plan too if you have one. Make sure you’re chipping in at least enough of your paycheck to get the matching contribution.
Schedule recurring transfers from checking to savings
So, if you don’t have direct deposit you can still transfer money to savings on autopilot.
Here’s what you do:
- Decide how much to save each payday.
- Set up an automatic transfer from checking to savings on the dates you get paid.
Boom–it’s that easy.
The beauty of saving automatically is that the money actually gets to savings. You don’t have a chance to spend it the way you might if it went to checking first.
And if you do need to tap into your savings for any reason, it’s easy to transfer money back to checking.
Use an automatic savings app
Financial apps are great for managing your money.
Digit saves money for you.
You link your bank account to the app. Digit reviews your spending and looks for the money you could put into savings.
Once it pinpoints those small amounts, it transfers them automatically to a Digit savings account. That’s all there is to it.
Digit used to be free but it now costs $2.99/month to save with the app. But, you can still try it free for 30 days to see if it works for you.
And if you’re skeptical about whether it can help you save, here’s some proof. Jackie Lam (a fellow personal finance freelance writer) used the app to save $20,000 in three years.
What If You’ve Done All These Things and Still Can’t Stop Living Paycheck to Paycheck?
That’s a great question.
If you’ve cut your budget down to the bone and you’re using some (or all) of the money-saving tips I’ve mentioned here but you still come up short each month, then you might have an income problem, not a spending problem.
So what do you do about that?
Well, the obvious answer is to look for ways to make more money.
The good news is, there are plenty of ways you can do that.
For example, you could ask for a raise or a promotion at work. That’s one way to earn more money.
Or, you could increase your hours if you get paid by the hour.
But my favorite way to make money is online. Because there are so many options.
- Start a side hustle.
- Start a money-making blog.
- Launch a career as a freelancer and get paid to write.
- Become a virtual assistant and help other entrepreneurs run their business.
- Learn how to be a freelance proofreader.
- Make money as an online transcriptionist.
- Or take your pick of dozens more online business ideas.
And you can do offline side hustles or businesses to make extra money, too.
For example, you could offer childcare services through Sittercity or sell baked goods from home. Or if you’re the outdoorsy type, you could start a weekend lawn care business.
If you’re not sure what kind of side hustle or business to start, ask yourself three questions:
- What skills or knowledge do I have?
- Who needs those skills or that knowledge?
- What am I interested in?
That can help you get started in the right direction for being successful with a side hustle or business.
(And if you’re thinking of trying your hand at blogging, be sure to read my step-by-step tutorial for starting a blog with Siteground. 🙂 )
Here’s one more tip: make sure you have a plan for any extra money you’re making.
If you have debt you’re carrying around, for example, use some of that cash to get rid of it.
Add it to your emergency savings account or stash it in an investment account where it can grow.
Plan out some clear financial goals you can focus on, then use the extra money you’re making to crush them.
Have You Been Able to Stop Living Paycheck to Paycheck?
The struggle to stop living paycheck to paycheck is real for a lot of people. But it’s not a permanent situation you have to accept where your money is concerned.
It’s possible to get out of the cycle with some strategic changes to your financial approach.
If you’ve successfully overcome the paycheck to paycheck lifestyle and started saving, head to the comments and share your best tips on how to do it!
I hope you’ll pin and share this post if it helped you. And of course, check out the free budget bundle if you haven’t yet.
It includes a budget and expense tracker spreadsheet, a how-to guide to making a budget and a financial goal-setting workbook!