If you’re living paycheck to paycheck, you’re not alone. 78% of Americans are in the same boat, and that statistic is true across all socio-economic levels.
The thing is, living paycheck to paycheck doesn’t have anything to do with how much money you make. It’s all about implementing the right budget strategy so you maintain adequate cash-flow and saving consistently for larger expenses.
But how do you stop the paycheck to paycheck cycle for good? I can feel like a catch-22, an endless cycle of paying one bill, only to run out of money before you can catch up on another. The good news: you can end it no matter where you’re starting from!
Here are 23 strategies to get out of the vicious paycheck to paycheck cycle.
You need to have a strategy for paying off debt so that 1- it doesn’t overwhelm you and 2- you don’t accidentally run out of money to meet your basic needs. Here’s my take on the debt snowball plan.
No matter what, start with a monthly budget. That gives you an overview to start with and since bills are paid monthly, it makes the most sense. But then you can break down what gets paid when according to your paychecks. This can help alleviate cash flow problems.
Anytime you get an annual bonus, a tax refund, or a three paycheck month (for biweekly paychecks), plan to use that money for KNOWN future needs, such as house repairs, car tires, and doctor bills.
Sometimes it comes down to putting your needs before wants. Stop buying drinks from the gas station. Stop going to the mall just because there’s a sale. Block yourself from online shopping if that’s a weak point. Getting out of the paycheck-to-paycheck cycle requires a reduction in spending.
Keep a small cushion in your checking account to prevent overdraft charges should you make a mistake, a miscalculation, or underestimate the cost of a necessity in your budget.
Always buy your food, pay your utilities and mortgage/rent, and put gas in the car BEFORE you pay on the debt. Do not pay VISA and then wonder how you’ll have enough to eat.
Dave Ramsey’s Baby Step 1 says to save $1,000 for a starter emergency fund. My advice: do it. Now. Don’t pay anything extra on debt until you’ve got this $1,000 taken care of. Emergencies WILL happen and you need this buffer to get out of the paycheck-to-paycheck cycle.
There are a lot of ways to budget, but only one EFFECTIVE way, and that is with a zero-based budget. My free 5 day budget challenge takes you through the steps to set up a successful zero-based budget- sign up here.
I know this one hurts. And it’s not the right solution for everyone. But, if you have even a little equity in the vehicle and a monster of a payment, gaining those $500-ish a month will help you SO MUCH to gain traction with your finances. You can always upgrade again when you have money to pay cash.
When was the last time you added up how much you spend on restaurants in one month? This is what I can “ripping off the bandaid.” It hurts for a second, but it’s also super cool to see how much money you can save by challenging yourself to eat out half as often, or even less.
Sometimes cash flow problems occur because all the bills are due at one time and you haven’t had a chance to save up enough in your checking account to cover everything at once. Most companies will let you request a due date, so make some calls and get those due dates adjusted on a schedule that’s in sync with your paychecks.
Cash helps you save money because your brain processes spending decisions differently, helping you spend less and save more. Pick three categories as cash-only and see how it goes! My favorites are restaurants, clothing, and entertainment.
If you’re behind on bills, make it your priority to catch up on these FIRST. You’ll save in interest and late fees, and once you’re caught up, your budget will run much more smoothly.
If you’ve had bills in collections for awhile, you can often settle them for less than what is owed. Make sure you get the agreement in writing before sending a check, and never give a collections agency access to your bank account.
Medical debt can be super stressful, but hospitals and doctors offices are surprisingly willing to work with you to make a reasonable payment plan. If you have the money to pay it in full, that’s always best, but when it’s not possible, you can sometimes negotiate discounts on top of the payment plan if you’re experiencing financial hardship. It’s always worth a phone call to find out.
This one can be a fun challenge if you let it! In a no-spend month, you commit to zero discretionary spending. Yes, it can be tough, but it’s also an amazing opportunity to learn contentedness, gratitude, and joy without the distraction of new stuff. It’s an exercise in learning the difference between needs and wants, a creative challenge to find free sources of entertainment (nature, the library, etc) and at the end of the month, you WILL have money saved!
Food is a tough category to master but it can be a source of big savings when you get a good strategy in place! Here’s more on my own journey to make a monthly meal plan and some helpful meal planning printables!
There are times when we just need that income boost to get the ball rolling. Today there are so many opportunities online that you can simply sign up for, whether it’s Uber Eats, grocery shopping with Instacart, driving for Lyft, dog-walking with Wag, the list goes on. The opportunity is there for the taking!
Might as well kill two birds with one stone and de-clutter, right? It feels good to enjoy a home without all the stuff you don’t value anymore, and if you can make money from it, why not?
Part of budgeting is tracking your expenses. This will help you know where your money is actually going instead of wondering where it went! Then you can use that knowledge to redirect income to your priorities.
My favorite budgeting app is Every Dollar. I know people also like YNAB (too complicated for my taste). Using an app can add a lot of convenience if you haven’t tried one for budgeting, so give it a shot and see if it helps you to get your budget under control.
The higher the deductible, the lower the premium. Once you have your $1,000 starter emergency fund saved, you may be able to save money by increasing your deductible.
Gather a list of all your subscriptions- Amazon Prime, Netflix, Hulu, Spotify, Ipsy, Costco, the gym, etc… and freeze them for 30 days. At the end of those 30 days, decide which ones you want to keep, and which ones you can do without.
If you want to end the paycheck-to-paycheck cycle, then you MUST commit to NO MORE DEBT. Monthly payments are only manageable as long as life is sailing smoothly. As soon as there is a job loss, a medical event, a car accident, or any number of life circumstances that require money, you’ll find yourself back at square one. When you commit to no new debt, you’re setting yourself up for financial success.
Ready to take the leap? Sign up for my free 5 Day Budget Challenge. Learn how to take control of your money once and for all with this fail-proof budget framework!
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