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How to Stop Living Paycheck to Paycheck for Good
Learn the best ways to manage your money and break the paycheck to paycheck cycle!
Raise your hand if you’re tired of feeling like you never have enough money to go around.
Living paycheck to paycheck can be a strain financially and emotionally. But it’s a reality 63% of Americans face.
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’ve totally been there, so I know how much it can suck.
And all it takes is one emergency to put you behind on bills and struggling.
But the good news is you don’t have to stay stuck in the paycheck to paycheck cycle.
10 Ways to Stop Living Paycheck to Paycheck
1. Track your spending
If you want to stop living paycheck to paycheck and start saving, you have to know what you’re spending first.
There are different ways to track your spending.
- Download a budgeting app (I like Personal Capital)
- Record expenses in a spreadsheet
- Jot it down in a notebook
I recommend tracking your expenses for at least one month to get a feel for where your money is going.
Once you’ve done that, 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.
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.
Billshark can be a huge help with this.
This financial tool reviews your spending to find the money-wasters and eliminate them. It can also help you save money by negotiating your cellphone, internet and other bills down.
3. Start a monthly budget
It’s tough to stop living paycheck to paycheck when you don’t have a monthly budget in place.
Your budget is your guide for how you’ll spend your money (or use it to pay down debt or save it).
And it’s something you can’t skip out on if you want to achieve financial wellness.
To make a simple budget, you simply:
- Add up your income for the month
- Add up your expenses for the month
- Subtract your expenses from your income
I love using this budget planner to keep track of my expenses and income each month.
If you’re living paycheck to paycheck, odds are you won’t have much money left over each month, if anything.
And you could even end up in the red, which means you’re spending more than you make.
If that’s the case, then you need to go back to your expenses to see what you can cut. Again, this is something Billshark can help with.
At the same time, you can also look for ways to make more money.
4. Grow your income
If you’ve cut your budget down to the bone and you’re still coming 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 proofreading 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 businesses
- Get paid to teach kids online
- Earn an income as an online stylist
- 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.
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.
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.
5. Get rid of your debt
Debt can be a huge obstacle when you’re ready to stop living paycheck to paycheck.
If a big chunk of your income is going to debt each month, then it can seem impossible to save money or work toward your other money goals.
Whether it’s credit cards, student loans, car loans or other debts, getting rid of them is a must for breaking out of paycheck to paycheck mode.
I’ve paid off close to $100,000 in non-mortgage debt so I know it can be done, even on a low income.
Here are some of my best tips for tackling your debt for good:
- Pick a method that works for you. Whether you use Dave Ramsey’s debt snowball method or the debt avalanche to get out of debt, pick a system that you can stick to.
- Automate debt repayment. If you can put debt payments on autopilot, that can go a long way toward helping you make progress in what you’re paying off.
- Make your debt less expensive. Reducing your credit card APR or consolidating debt with a low-interest loan can help you save money and ditch your debt faster.
If you’re looking for a helpful tool to make paying off debt easier, check out Tally.
The Tally app saves you money on credit card interest so you can pay off your debts in less time. Plus, it makes it super simple to stay on top of your due dates.
6. Complete a no-spend challenge
A no-spend challenge can be a helpful way to stop living paycheck to paycheck.
With a no-spend challenge, you commit to not spending money on anything other than essentials for a set period of time.
So you might try a spending fast for a week or even a month if you’re feeling ambitious.
The idea is that you don’t spend money on anything non-essential. So no eating out, no new clothes, no impulse buys–you get the picture.
A no-spend challenge can allow you to get some perspective on what your wants and needs are. And once you have clarity on that, it becomes a lot easier to prioritize spending.
You can also use money challenges to grow savings.
For example, the 52-week money challenge can help you save over $1,300 a year just by saving small amounts!
7. Try some creative ways to cut your spending
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.
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 in-store or 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 ways to save money, check out these posts:
8. Save money 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 a savings account
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 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.
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!
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.
9. Sell things you don’t need to make extra cash
If you’ve got extra stuff lying around, you could turn it into cash to help you get ahead.
For example, you could sell:
- Toys your kids no longer play
- Video games or other electronics
- Small kitchen appliances or gadgets
- Sporting goods or fitness equipment
If you need some ideas on where to sell your clutter, check out these apps:
⇒Gazelle (for selling electronics)
⇒SecondSale (for selling books)
⇒Decluttr (for selling everything else!)
10. Use windfalls to your advantage
Windfalls can bring some extra cash your way and they can also help you stop living paycheck to paycheck if you’re using them to grow your savings or pay down debt.
For example, you could use your tax refund to wipe out the balance on one of your credit cards.
Or you could use a bonus from work to add $1,000 to your emergency fund.
It’s tempting to spend windfalls when you get them but that won’t leave you any better off financially.
By putting that extra money to work positively, you can get one step closer to breaking out of the paycheck to paycheck hole.
What are you doing to get ahead financially?
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!
And please pin and share this post if it helped you!