How to stop living the paycheck-to-paycheck lifestyle

Living Paycheck-to-Paycheck Is a Reality For 75% of Americans

For Laura Jones, it wasn't a lack of savings that led to her living paycheck to paycheck. In fact, the 38-year-old Lawrenceburg, Indiana, resident had been diligently putting money away in her retirement account. However, when she lost a job, she realized her money was out of reach, and frugal living became a necessity.

"We tell people to put money into [retirement] accounts where you can't touch them," Jones says, "but [I've learned] you still need an emergency fund." Jones eventually landed a job selling insurance and was able to put away enough in an accessible savings account for a year's worth of expenses but not before going through a period of stretching one paycheck to the next.

People may end up living paycheck to paycheck for a number of reasons. They could be forced into the situation by events outside their control, or it could be the result of financial choices they made. Either way, it's not an enjoyable way to live. Here's how to get out of the paycheck-to-paycheck cycle and on a comfortable budget.

1. Get a handle on your money situation.

Crystal Paine, founder of savings website, relates a recent experience she had at a conference. A woman confided her budget was short every month but explained she planned to open an at-home business to cover the deficit. The only problem, Paine says, is that the woman didn't already have a written budget.

"Don't start trying to earn more money until you start telling all the money you already have where to go," she says.

In some situations, earning more money may not even be necessary to wipe out a perceived deficit. A family may have plenty of money coming in to cover expenses, but they could be spending it unwisely. "Sometimes it's not a money problem," Paine says. "It's a self-discipline problem."

Kelsa Dickey, a financial coach and owner of Fiscal Fitness Phoenix, says the best way to gain control of your finances is to block out time before each payday to decide how to spend that money. She recommends listing all upcoming bills and the amount due. Then, order them by their due date.

"It doesn't need to be an Excel spreadsheet," Dickey says. "Even a Post-it note you stick on the edge of your computer monitor can be enough." Dickey suggests people eventually work up to having a written plan that looks at least three months into the future, so they can plan for expenses coming down the pipeline.

2. Cut spending from your budget.

If you have a written budget, and find you still don't have any extra left each month, the first order of business is to reduce expenses.

Jones says her period of paycheck-to-paycheck living was a little more manageable because she already had a history of frugal living upon which to fall back. After graduating from college in debt, she found how to make do without much money. Today, the debt is gone, but she is still careful about her spending. "If you can't pay cash for it, it's probably not something you really need," she says of most purchases.

On her website, Paine offers a laundry list of money-saving ideas to help those who are trying frugal living for the first time. Here are a few suggestions from a series of articles she published on 52 ways to save $100 each year:

  • Pack lunches rather than dine out.
  • Turn down the thermostat three to four degrees in the winter.
  • Combine errands to save gas.
  • Eat from the pantry and reduce meat consumption.

On their own, they don't seem to amount to much, but Paine notes that someone who follows her suggestions each week could end up with more than $5,000 per year to cushion a budget.

However, it's not necessary to implement 52 money-savings strategies at once to make a difference. Dickey suggests cutting back on one area to start. "Pick your vice, and put a spending limit on that category," she says.

3. Look for ways to increase your incoming cash.

The other way to stop living paycheck to paycheck is to look for ways to increase available cash. Income-generating ideas aren't as numerous as cost-cutting options, but there are still plenty of ways to bring in more money. Here are a few ideas:

  • Find a second job.
  • Apply for a promotion.
  • Declutter and sell items on Craigslist, eBay or at a consignment shop.
  • Return to school for more education, which could lead to a better-paying job.

Some of these take time and, in the case of going back to school, may cost money. However, increasing income could be the best way to break the paycheck-to-paycheck cycle for good, so long as you don't let your expenses increase along with your income.

4. Focus on a bright future.

For some, living paycheck to paycheck is temporary, and extra income, such as a raise or child support payments, is on the horizon. Paine is among those who have lived on a meager budget knowing it wasn't forever. Her lean years were a result of her family's commitment to remain debt-free while her husband attended law school. She knew he would eventually earn enough to give them financial breathing room, but it was still a struggle to make ends meet. "I couldn't even buy clothes at the thrift store," she says of their tight budget. "But we knew it would only be for three to three-and-a-half years."

While more money can help, living paycheck to paycheck may have more to do with someone's state of mind than their cash flow. "I have some clients who have $400,000 incomes and have [financial] trouble, and I have clients who make $30,000 and are perfectly content," Dickey says.

You're not stuck living paycheck to paycheck unless you choose to be, Paine says. "What one thing can [you] do today to make a little bit of a difference?" she says.

As Jones and Paine can both attest, the little things can add up to become money in the bank and a budget with cash to spare each month.

Copyright 2015 U.S. News & World Report

Click through the slideshow below for some great ways to save:

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How to stop living the paycheck-to-paycheck lifestyle


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How about embracing cooking as a new hobby? You will simultaneously be eating healthier, saving money on take-out and maybe even exercising your creative side. Following food blogs is a great, inexpensive way to find recipes and inspiration. One of my favorites,, factors cost into the equation too.

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No, this Mint won’t print more money for you to spend on a trip to Bali, but it will help you keep track of your spending. The app allows you to create a budget and set specific savings goals, making it easier to hold yourself accountable for saving that extra cash.

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