8 Tactics to Stop Living Paycheck to Paycheck


If you feel like your paycheck is gone the moment you get it, you’re not alone. Many people are stuck living paycheck-to-paycheck and just can’t seem to break the cycle.

While escaping this dilemma isn’t easy, it’s possible to get ahead by changing your mindset, examining your lifestyle, and creating new habits. Once you free up even a small amount of discretionary income each month, it’s possible to build a better financial life with more security and less stress.

8 Tactics to Stop Living Paycheck to Paycheck

  1. Admit you have a challenge to overcome. 
  2. Forget what other people think. 
  3. Measure your cash flow carefully. 
  4. Cut your largest expenses first. 
  5. Reduce the cost of debt. 
  6. Automate saving (even small amounts). 
  7. Create more ways to make money. 
  8. Focus on the future you want.

Use these eight tactics to break the paycheck-to-paycheck cycle for good.

1. Admit you have a challenge to overcome.

To break the cycle of living paycheck-to-paycheck, first, you must admit that it’s a problem, if you haven’t already. If you’re not setting aside any money, you’re in a dangerous position that leaves you vulnerable to unexpected hardships. Any setback can put you in an even worse position than you are now.

If you don’t save for emergencies or your long-term needs, you’re not financially grounded—you’re simply drifting from one bank deposit to the next. That’s a surefire way to devastate your financial life.

When there’s money left over at the end of the month, you have the power to save and invest. Without it, you simply don’t have the ability to build financial security. 

Whether the root of your money strain is due to overspending or earning too little, it’s time to face it head on. If you don’t act now to break the pay-to-pay cycle, accumulating a cash reserve or building wealth for retirement simply won’t be possible.

If you have a partner or spouse, talk to him or her about making a commitment to turn your financial life around. You might set a goal to build a small emergency fund before the end of the year or contribute to a retirement account every month.

When there’s money left over at the end of the month, you have the power to save and invest. Without it, you simply don’t have the ability to build financial security.

2. Forget what other people think.

Living paycheck-to-paycheck is a predicament that can devastate your finances no matter how much you make. Even high earners can let expenses and consumer debt get out of control.

When you want the appearance of success, or feel entitled to have what others have, you’re probably living a lifestyle that you can’t afford. If you equate your self-image with material things that are draining your bank account, it’s time to quit worrying about what other people think.

As I say in my book, Money Girl’s Smart Moves to Grow Rich, “A poor self-image is a bottomless pit that no amount of spending can fill up or make good. Search for ways to fulfill those emotional needs without spending beyond your means.”

Some people were born savers and others continually struggle to delay gratification. If you can’t seem to put a lid on spending, it’s time to quit rationalizing bad behavior that’s holding you back.

You can take full control of your finances only when you take full control of yourself. For many people, the inability to manage money is really the inability to manage themselves.

So, get comfortable saying “no” to family or friends who may pressure you to spend more than you should. Get focused on goals you want to achieve and don’t let anyone prevent you from reaching them.

3. Measure your cash flow carefully.

You can’t change what you don’t measure, so track your expenses carefully. No matter how much you earn, you must spend less. Again, when you live paycheck-to-paycheck and spend everything you make, it’s impossible to get ahead.

Find a way to keep an eye on your spending that’s easy for you. It could be jotting down every expense in a paper notebook or entering costs into a computer spreadsheet.

Try apps, such as Mint and Quicken, that sync with your financial accounts and automatically pull in your transactions. Tiller is a Google Sheets-based tool that consolidates your daily financial transactions into a dashboard that you can customize.

Technology makes it easier than ever to create a spending plan and stick to it. So, if you don’t have a clue where your money goes every month, get curious. You may be shocked by what you find.

Budgets don’t have to be forever, but they’re an essential part of taking control of your cash flow and understanding how to cut back. Then you can allocate that savings to build wealth and security for the future.

4. Cut your largest expenses first.

An effective way to stop living paycheck-to-paycheck is to cut your largest expenses first, such as housing. A good rule of thumb is to never pay more than 20% to 25% of your gross income on rent or a mortgage, even if a home lender says you can afford a bigger payment.

You may need a radical lifestyle change to downsize your housing. Consider a variety of options, even if you don’t like them. Remember, financial sacrifices will help you get ahead and don’t have to be permanent.

If you buckle down for a year, you can accomplish a lot with your money. You could move to a less expensive apartment, home, neighborhood, town, or state. Consider moving in with family or getting a roommate to share expenses.

Vehicles are another budget-buster to evaluate. Driving a used car is always a better deal than buying a new one. Never let your car payment exceed 10% of your gross income. And check out other transportation options, such as public transit, carpooling, or using a ride-sharing service.

Keep looking for more big cuts. You’ve got to take control of your financial life and make serious changes to break the pay-to-pay cycle and create more financial breathing room.

5. Reduce the cost of debt.

Many people are drowning in expensive debt that keeps them locked in the paycheck-to-paycheck habit. Can you refinance your mortgage for a lower interest rate or sell your home and move into a less expensive one?

Shaving the interest off high-rate credit cards and loans can add up to big savings. Consider consolidating debt using a low-rate personal loan so you have more money available every month.

Consider consolidating debt using a low-rate personal loan so you have more money available every month.

6. Automate saving (even small amounts).

No matter your financial goals, automation is the trick to making saving easy. For instance, if you’re looking forward to a comfortable retirement, set up monthly recurring contributions to an Individual Retirement Arrangement or IRA.

If you have a workplace account, such as a 401k or 403b, they offer built-in automation because contributions can only come from your paycheck.

If you want to save for an emergency fund or an upcoming vacation, set up a recurring transfer to a safe, FDIC-insured bank savings account. If you want to save for a child’s education, consider a 529 college savings plan. Moving money into a dedicated savings account, before you have a chance to spend it, makes it more likely that you’ll meet your goals.

Keep increasing the percentage of your paycheck that you save on a regular basis. For instance, if you’re contributing 3% to a retirement plan, bump it up to 4% next year.

7. Create more ways to make money.

Cutting unnecessary expenses is great for breaking the paycheck-to-paycheck cycle, but earning more can be the ticket to turning your financial life around. You could:

  • Get a second job
  • Pick up extra hours at work
  • Ask for a raise
  • Seek a promotion
  • Start a side hustle

There are many ways to create more income streams, such as driving for Lyft or Uber, taking surveys on Survey Junkie, house sitting, dog walking, tutoring, delivering groceries for Instacart, or writing. Try something new. You likely have skills that can be used in a variety of jobs and types of work.

8. Focus on the future lifestyle you want

If you’re like me you want security and financial freedom, which are impossible to get when you’re trapped living paycheck-to-paycheck. Instead of hoping that next month will be different from this month, focus on the future you want to create.

Nothing worthwhile is easy to achieve. So, decide today how you want your life to be in 5, 10, or 20 years from now. The moment you create a plan and begin taking small action steps, you’ll feel much less stress and instability.

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