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Do you want to stop living paycheck to paycheck?
It’s a financial situation that many people face and can cause a lot of stress and anxiety.
We’ve been in the situation too; where our bank account was nearly at zero before the next paycheck and we had the next check already spent on upcoming bills and debt payments.
But, there are ways to get out of the financial situation and achieve financial peace.
It starts with understanding why you’re living paycheck to paycheck.
What is Living Paycheck to Paycheck?
While living paycheck to paycheck is pretty descriptive, what it means depends on who you ask or where you look on the internet.
We view living paycheck to paycheck as spending your paycheck completely before receiving your next paycheck.
You are unable to save any money and if you didn’t receive your next paycheck you wouldn’t be able to pay your bills.
You may even have to pay for purchases using debt like credit cards and the balance isn’t paid off.
Debt does create a grey area when it comes to living paycheck to paycheck.
Big purchases like a house, car, health care or education result in monthly payments to pay back the debt.
You may be repaying these debts but you’re not living paycheck to paycheck.
Meanwhile, if you’re using credit cards to cover your purchases and you’re unable to pay off the balance each month, you’re living worse than
Now that we are on the same page, the biggest question to ask is why are you in this current financial situation?
Why Are You Living Paycheck to Paycheck?
Sometimes we look for the solution to our problem without getting all of the details about our problem first.
And, a problem can have multiple causes.
When you’re living paycheck to paycheck, it means you’re either not earning enough money, you’re spending too much money, or both.
Each of these different reasons for living paycheck to paycheck have different solutions.
You should spend some time and look at your income and expenses.
A good way to do this is to pull your expenses for the last three months from your financial accounts and categorize each purchase as essential or nonessential.
Check out our post on how to categorize your expenses for additional help.
Once you have your expenses categorized, you can compare them to your income.
If you or your family earn less than $60,000 and your essential expenses are greater than 50% of your income, you probably need to think about how you might earn more money.
If you are spending more than 30% of your income on nonessential expenses, you probably need to spend less money.
For more information on this, check out our post:
While we don’t believe the budget is applicable to everyone’s financial situation, it is a good guideline for comparing your own earning, spending, and saving.
Now that you know why you are living paycheck to paycheck, you can focus on how to stop doing it and start saving money.
How to Stop Living Paycheck to Paycheck
There are many different ways to stop living paycheck to paycheck once you know the cause of why you’re in that financial situation.
Below we have discussed all kinds of ways to spend less money as well as make more money.
But, before you think about spending less money or making more money you should actually consider the way you think about money.
Think About Your Money Mindset
At the end of the day, your money is just as much about psychology as the money in your bank accounts, investment accounts, and debt accounts.
What is your relationship with money?
Do you think that money is the root of all evil or is it simply a tool for exchanging goods and services?
The way you think about money will determine how you use and attract money.
If you think negatively about money you’re probably going to have a hard time being successful with money.
Can you think of another time in your life when you thought negatively about something but you were still successful?
You have to have positive thoughts about money if you want to be successful with your money and stop living paycheck to paycheck.
Once you start doing that you’ll find it much easier to spend less money and make more money.
Spend Less Money
Spending less money is difficult but it usually requires less time than making more money.
It’s difficult to spend less money on necessities like home, basic food, and other basic living needs.
But, that doesn’t mean you can’t reduce your spending in other areas and figure out ways to keep more money in your bank account.
Track Your Spending
The first thing you have to do to start spending less and stop living paycheck to paycheck is know how much you’re spending.
You should implement a system where you are consistently seeing how much money is going to different categories.
We like to use our own unique method of tracking expenses because it helps us budget easier.
There are also popular websites and apps like Personal Capital and Mint that will automate a lot of this tracking.
Once you know how much you’re spending, you can use a budget to help you spend less money.
Create a Budget and Stick to It
You may have already heard this a million times, but a budget is one of the financial tools you need to stop living paycheck to paycheck.
A budget is more about getting you thinking about your spending than knowing exactly how much you’re spending in one area.
It’s much different to think a potential purchase with a budget than without a budget.
With a budget, you may think you only have $200 this quarter to spend on drinks so you choose carefully which times you want to go out.
Without a budget, there is less of a mental block preventing you from overspending.
Use a budget to set spending goals and start spending less money.
Here are some helpful resources to help you start budgeting:
Stop Trying to Keep Up with the Joneses
Unfortunately, we live in a world where we are constantly bombarded with images of other people wearing nice clothes and going to exotic places.
Without thinking how they paid for those nice things, we first think why don’t we have those nice things.
One person may be paying cash while another person may be putting it all on the credit card.
Credit and debt allow a lot of people to create the appearance of rich lives.
But, if you do this you’ll likely find yourself drowning in debt and struggling just to make the minimum debt payments.
If you want a better financial situation it means making a choice between having more money or buying the newest technology or going on a vacation when you feel like it.
Try a No-Spend Challenge
If you really
Our favorite no spend challenge is to stop spending in one nonessential category every month.
The category we most often focus on is dining out at restaurants and other food places.
These challenges are a great way to reset your spending habits.
We always spend less the next month after doing a no spend challenge.
If you’re interested in a challenge to save money, sign up for our email list below to get access to our 4-week #savemore challenge plus instant access to our resource library full of other awesome freebies!
Reduce Your Debt
Debt sucks.
It can be used in good ways to help you make more money or buy a home.
But, paying back debt always sucks.
You have to pay back the balance of the debt and you also have to pay interest on the debt.
If you can reduce your debt, it can greatly help you to stop living paycheck to paycheck.
The faster you pay off your debt, the less interest you’ll pay.
It’s a cycle that leads to you paying off your debt and freeing up some money that you can start saving.
Take Advantage of Money Saving Resources
There are all kinds of apps, websites, credit cards, and programs where you can spend less money.
We cover some of these apps and websites in our post:
The 12 Best Apps and Websites to Make and Save Money
You also join loyalty programs that offer discounts and apply for credit cards that pay you cash back or other rewards.
Take advantage of these different programs so that you never pay full price for your purchases.
Make More Money
Wouldn’t life be a lot easier if we could just make more money?
We wouldn’t have to worry about our spending habits because we would make enough to cover all of our purchases.
While this isn’t really true (just go ask the many people who make a lot of money but still live paycheck to paycheck) it may be worthwhile for you to spend time focusing on earning more money.
And, it’s going to take time.
Making money usually requires your time.
The only case where this isn’t true is passive income which doesn’t require time but does require money.
So, what can you do?
Search for a New Job in Your Field
We’re going to start with the traditional method first.
One of the easier ways to earn more money is either get promoted at your company or organization or move to a new company and a more senior position.
If you’ve been in your position for more than two years, you may have success in being promoted or being hired to the next level of your career path.
Consider the skills or knowledge you might need to make the leap and start making more money.
Look into Other Fields of Work
If there is no where up for you to go, look into a new field of work to make more money.
There is nothing better in life than being able to adapt and learn.
The world is constantly evolving and it’s good to think about new fields that are popping up.
Technology and the internet is one area where there are all kinds of different jobs that require various skills.
The smart phone didn’t really exist just 10 years ago and now there are people all across the world that make millions of dollars each year from it.
From coders creating apps to people becoming
You can quickly find emerging or established industries that
Start a Business
The last two options likely require you to have a boss and rules.
Why not make your own rules and be your own boss?
Starting a business can take a lot of work, likely more than you can imagine.
And, there are a lot of factors that can cause you to fail, many outside of your control.
But, if successful, starting a business can create the sweet combination of making money and being your own boss.
You might even be able to do something that is rewarding.
Think about your skills and what types of businesses you might be able to offer.
And, it doesn’t have to be an extravagant new businesses.
There are millionaires across the United States and world who simply open franchises.
Do some research and see if there are any business opportunities that will allow you to earn more money.
Earn Extra Money with a Side Hustle
If none of the previous options are viable, there are plenty of ways to make extra cash.
It will probably be difficult make a lot more money, but you can find side hustles and other ways to make some more money.
You can even make money from walking, although it might not be much.
Think of how you can most effectively use your free time to make more money.
You may even want to start your own business in your free time and slowly build it up.
Check out these forms of almost-passive income that require work up front but can generate income forever.
Final Thoughts
When you’re living paycheck to paycheck, it can be hard to see the light.
The stress and anxiety are suffocating and you feel like you are drowning and slowly sinking away.
That’s why you have to understand why you are in your current financial situation.
From there, you can create a plan for how you are going to start spending less money, start earning more money, or both.
And, if you stick to the plan and remain committed you can get out of the payday to payday cycle of figuring out how you’re going to pay for your bills.
But, it will take time and focus.
If you need help organizing your finances so that you can start tracking your spending and create a budget, check out our course on simplifying your finances and master your money.
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