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13 Strategies to Help You Stop Living Paycheck to Paycheck

How To Stop Living Paycheck to Paycheck | How to make more money | How to budget

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Living paycheck to paycheck means having little to no money left over at the end of each month. It means you’re having trouble covering expenses, especially if you miss a day of work. When you live paycheck to paycheck, there’s a lot of stress around money in your life. You might not be able to cover an unplanned expense.

In 2020, nearly 78% of Americans were living paycheck to paycheck. Part of the issue is not earning enough money, and another part is spending too much. When you find ways to curb your spending and increase your earnings, you’ll begin working your way out of the paycheck to paycheck grind.

In this article, we’ll go over what it means to live paycheck to paycheck and how to get out of the cycle. We’ll also talk about the benefits of improving your financial well-being by breaking out of living paycheck to paycheck each month.

What Does It Mean To Live Paycheck to Paycheck

Living paycheck to paycheck means that you aren't saving any money at the end of a given month. You are spending just as much as you're making, and you may not have anything saved up in a bank account for an emergency. If you're living paycheck to paycheck, missing a single day of work due to sickness or a personal reason could cause you to sink further into debt because you can't afford to not get paid for that day.

Living paycheck to paycheck can be scary when it's going on for a long time because when you're unable to save, you're forced to use debt to cover unexpected expenses. Below, we’ll go over several tips to help you save money each month and remedy your situation.

1. Create a Budget

Learn to create a budget when you live paycheck to paycheck. This is helpful to everyone, not just those looking to break the paycheck to paycheck cycle. Use Clean Cut Finance’s budgeting template spreadsheet to write up your income and expenses.

You'll want to account for all of your monthly living expenses, such as rent, utility bills, groceries, loans, subscriptions, transportation, etc. Fill in all of that information, and you'll be left with what you have after your paycheck minus those expenses. Check your checking account and credit card statements to see how much you're paying for everything.

Now, start deducting other expenses, such as how much you're spending on entertainment, going out to eat, new clothes, games, haircuts, hobbies, and anything else that might be either less common or variable each month. With variable expenses, take 6-12 months' worth of spending and average it into your monthly budget.

Once you’ve filled in all of your spending information, the budget template will show you how much you have leftover each month. If you're having trouble sticking to your budget, you'll need to identify what you can cut back on. By tracking your spending, you can see that perhaps you eat out too much or spend too much on entertainment.

It could be something more elusive, like your internet bill is too high, and you haven't negotiated it recently. You can lower many of your common living expenses with a few phone calls.

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2. Cut Back On Spending

It’s okay to have fun sometimes, but if you’re living paycheck to paycheck, then it makes sense to cut back on discretionary spending to some extent if you can.

Discretionary spending is anything you're spending on things that you don't genuinely need. These can be things like gym memberships, video games, fashion or beauty boxes, or going out to eat and drink.

Look over your budget and find ways to tweak your spending. Can you go out to eat one less time per month or per week? Can you cancel a subscription or membership that you aren't using much? Using an app like Trim can help.

Trim helps you find recurring charges to your bank account and credit cards and will either negotiate these charges or cancel them altogether (your choice!). For the charges that Trim can't do automatically, you will be alerted to the charges and the amount, which will allow you to cancel them manually should you choose.

After you've decided on what you can cut back on, remove (or reduce) those items from your budget. This should improve your situation, but it may be that you're still in the red or in the green, but not by a lot. Let's look at the next thing to do.

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3. Go on a Spending Freeze

To boost your savings while living paycheck to paycheck, one thing to try is to go on a spending freeze. A spending freeze is when you stop all spending for a pre-determined amount of time, such as a few days or a week. When you stop spending, you force yourself to stop doing things you may do regularly, such as impulse buying or dining out.

One way to go on a spending freeze is to pay all of your bills on the first of the month and spend nothing for a week. By doing this regularly, you'll have extra money in your wallet each month that can go towards paying down debt or increasing your emergency fund.

Spending freezes can help curb impulse spending and make you rethink purchases that you may not need. They can also slow down daily spending, such as breakfast on the go or soft drinks at work. Spending freezes can also encourage you to do things such as making your own lunch instead of buying something each day.

4. Pay Down Credit Card Debt

When you’re trying to improve your financial situation by getting out of the paycheck to paycheck cycle, it makes sense to tackle your debt, This might be hard to do if you're already struggling, but once you lower your spending, you can take your extra money and pay down credit card debt. Paying down debt is great across the board, but credit card debt is often the worst due to high interest rates that make it more difficult to get your balance to zero in a reasonable time.

If you believe it will take you over a year to pay down your credit card debt, then you may be living above your means. To remedy this, you may need to cut back on spending even more or find a way to earn more money. 

Credit card debt affects many people, and tackling this debt is a key to better financial health.

Another option to help pay down credit cards is to get a personal loan where you can consolidate credit card debt to a much lower interest rate. Some personal loan companies offer rates as low as 5.99%, depending on your credit score, the reason for needing the loan, and the amount requested. 

A drawback to debt consolidation is that you won’t be able to have smaller wins as you pay down each credit card. Instead, you’ll have one larger balance that needs to be paid off over a few years.

The key advantage to consolidating your debt is that your interest rate may be considerably lower, which will save you loads of money on interest payments that you would have had to pay at your credit card’s higher interest rate.

Everyone's debt situation is different, and if you're considering debt consolidation, it may be beneficial to consult with a financial advisor or financial counselor.

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5. Lower Your Fixed Expenses

Fixed expenses are bills that are consistent each month. This includes expenses like your rent or mortgage, cable, internet, phone, and similar. You may not be able to eliminate these expenses, but you may be able to lower how much you’re paying. You might be overpaying for things such as cable, internet, and auto insurance. Reaching out to your service providers and asking for a lower rate can be enough to get an arrangement.

There are many methods to lowering a particular bill. Sometimes citing competitor rates can convince a company to lower the rate they’re charging you. Other times, being a loyal customer who always pays on time might work. Sometimes, simply stating you’re struggling financially, and proving it, may temporarily get you a lower rate. Alternatively, you can use an app like Trim that will negotiate your bills automatically. Trim will make these calls for you to save you the hassle.

Take a look at this article for some more ideas on how to lower your monthly living expenses.

6. Start A Side Hustle

It’s only possible to save so much money before we can’t cut our expenses anymore. In this case, it makes sense to start earning more money. One way to earn more money is to pick up a side hustle. A side hustle is something you can do a few hours a week, such as on your day off or a few nights here and there.

Even earning an extra $200 per month from a side hustle can go a long way to helping you get out of the paycheck to paycheck cycle. Using this money can help you pay off debts like your credit card, student loans, and other debts.

You can also use this additional money to boost your emergency fund so that you can handle an unexpected expense when it occurs.

A side hustle doesn't have to be permanent. It can be just enough to help you save money and not live paycheck to paycheck. Having a part-time side hustle is a great way to ramp up your monthly income.

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7. Save Money Every Month

Make it a habit to save every month. Put that money into a high-yield savings account. If you don't already have an emergency fund, begin accumulating one in a high-yield savings account. 

When you save money every month by improving your spending habits, you’ll improve your financial situation long term. As time goes on, you’ll have a fully-funded emergency fund and be able to cover unexpected expenses.

Automating your finances can help you save money and get you out of the paycheck to paycheck grind. When you automate your finances, you put your bills on autopay, and you set up recurring savings from your checking account to your savings account. This will take the micromanagement out of your money and allow you to focus on the big picture.

Consider using your tax refund to fund a high-yield savings account or to pay off some of your debt.

Even saving $5 a week to start will help you form great new habits and help you eliminate habits like spending too much money.

8. Make A Savings Goal To Stop Living Paycheck To Paycheck

Try to meet or exceed a monthly savings goal every month. Whether it's small, like $20, or large, like several hundred dollars or more, pick something reasonable. The idea is that your goal will be something to shoot for, and it will encourage you to keep at it.

It’s important to have goals so that you have direction in everything you do. Start small and make your goals incrementally higher until you reach a point where you are in a much better financial place.

Use your savings goal to help push yourself to further live below your means. When you live below your means, you are able to save more each month so that you can stop living paycheck to paycheck.

9. Live Below Your Means

Living below your means is when you spend less money than you earn. This is key in order to stop living paycheck to paycheck. Whether you cut expenses or increase earnings, living below your means has many benefits, including less financial stress and the ability to reach your financial goals faster and with greater ease.

10. Learn to Say “No”

Saying “no” to yourself, your spouse, or your kids is an important ability, especially when it comes to saving money. Sometimes you have to forego buying something for yourself or one of your family members in order to keep your finances in order. Not only is this a good practice to do, but saying “no” to your kids and explaining to them the importance of saving money will help them with their finances as they grow up.

11. Drive a Used Car

With new cars often costing $30,000 or more, it may make a lot of sense to buy a pre-owned or used car. Better yet, can you sell your new car that you currently have a monthly payment on and use the earnings to buy a used car where you have little to no monthly payment? How much money would you save per month if you did that, and what would you do with that money?

New cars lose up to 20% of their sticker price after one year, and some can lose up to 10% of their value when you first drive them off the lot. With this in mind, buying a car that’s already a year or two, or older, can save you a lot.

12. Go Out To Eat Less and Cook More

Going out to eat is an expensive activity that runs the average American household $3,000 per year, or $250 per month. For some, this number is significantly higher. By cooking, you’ll pay a fraction of the cost for food. 

Of course, going out to eat or ordering takeout once in a while is a good way to reward yourself, but making a habit of cooking more will save you significant cash.

One great way to learn how to cook is to order from a food service like HomeChef. HomeChef sends you all the ingredients and instructions to making meals, which not only tastes great, but the process will teach you how to cook. You can expect to pay between $8 and $9 per dinner meal with HomeChef, which can be quite a bit less than going out to eat.

13. Be Patient When Forging New Habits

Creating new habits takes time. With that in mind, you may slip now and then and spend more money than you intend to. The good news is, this is normal, and you don’t need to beat yourself up over it. 

Push yourself to stick to your new habits but be patient with yourself as you adjust to them. In the end, your new financial habits will help you stop living paycheck to paycheck.

Benefits of No Longer Living Paycheck to Paycheck

Let’s talk about three direct benefits of getting out of the paycheck to paycheck cycle. These benefits may motivate you to continue to work on your financial well-being.

Reduced Financial Stress

When you’re no longer living paycheck to paycheck, you have less financial stress in life. You’re no longer worried about not having enough money to cover your bills. You have extra savings in case you miss a day of work, or you have an unexpected expense.

You can sleep better at night knowing that you have flexibility with your money. You now have some breathing room.

Experience More In Life Due to More Money

You’ll be able to experience more in life because you have more money each month. This could be little things like taking your spouse out on a date or taking your kids out for more fun activities. It could mean saving for a larger purchase like a car or, eventually, a home.

Over time, you may build a larger savings, which could mean paying off all of your debt or going on refreshing vacations.

Increased Quality of Life

Your quality of life improves when you’re not living paycheck to paycheck. You feel more confident about your finances which lets you relax a bit. You can buy and experience things that make you happy. You can hire help for things you don’t want to or can’t do for yourself, such as getting a babysitter or a house cleaner.

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Wrapping It Up

It can take a decent amount of time to stop living paycheck to paycheck. It's not an overnight process, but through budgeting, lowering expenses, and saving every month, eventually, you'll begin to build up savings and have more breathing room should something unexpected come up.

When you are no longer living paycheck to paycheck, you enter step 3 of the 7 steps of financial freedom.

What steps have you taken to get out of the paycheck to paycheck grind?

23 thoughts on “13 Strategies to Help You Stop Living Paycheck to Paycheck”

  1. Great points you’ve made! I think a lot of people don’t know how to budget or buy things they really don’t need, so a buying freeze is a good idea.

  2. Over the past year, I’ve been doing much better at saving my money. I do need to go on more of a spending freeze again now as I had a little nest egg saved but then needed it for an emergency. These are really great tips. I now need to really save up my money again but these are great tips to start!

  3. Renee

    Great tips!! Working on #4 now! Thank you!

  4. Kenneth

    if you can,,,do some side hustles…better do it while we are strong enough…it really great to earn some extra..it helps a lot

  5. I used to live paycheck. No matter how much I budget or change my lifestyle, it was still wasn’t enough. It was until I changed my career and diversify my income that I was able to get out of the vicious cycle.

  6. Creating a budget and sticking to the budget is huge. Can’t spend what you don’t have.

  7. These are great tips – and after all I know, credit card debts are a big issue in the US. In Europe, it’s not so bad. Also, I believe we are less consume oriented which makes saving easier.

  8. really great tips, I think saving every month is so important no matter how small it may seem

  9. I don’t use paychecks but these are great points on how to do proper budget. and saving money is mostly important

  10. Thanks for the tips and insights and I think one very important rule is to make sure you have savings and you don’t overspend. – Knycx Journeying

  11. blair villanueva

    Saving money should become a habit. Cutting expenses such as dining out often, or taking Starbucks coffee helps to lessen your expenses. It is hard in the beginning but if it becomes a habit, it will be easier gradually.

  12. Agnes

    The lists you posted are the most important strategies to live by this time of financial crisis. Thanks for this blog post.

  13. I just challenge my fiancé to a spending freeze. I don’t leave the house that often to spend money. He on the other hand goes overboard while working. I hope he can do it.

  14. These are very useful tips.
    Making a budget at the start of the month really helps in maintaining a balance to the expense.
    Thanks for the additional tips!

  15. Monidipa

    Yes,I agree with all your points here. I had done some and the results of savings were very good!

  16. Mila R

    I believe that cutting spending is much easier than cut back on spending

  17. I love these tips on how to stop living pay check to pay check. There are so many tools that a person can use to get ahead. I had never even heard of trim that helps you negotiate your bills to a lower rate. I am definitely going to have to try that.

  18. been there done that. i was so happy when I stopped living paycheck to paycheck. it is such a joy! your plan seams legit!

  19. It comes down to a scarcity vs abundance mentality. With an abundance mentality, we understand that we have all and more that we need and we aren’t as swayed to purchase, use credit, and the like.

  20. Marjie Mare

    I am saving this post, it will help me to start 2021 better. Thanks for sharing.

  21. Very useful sharing of this strategies, savings are important, I am saving this post to keep as reminder to myself. cheers, siennylovesdrawing

  22. Thanks so much for these useful tips. I’m dreadful with my money so I will definitely try to follow these and hopefully be able to save more.

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