According to a recent study, 7 in 10 Americans live paycheck to paycheck.
If that is you, you are not alone. But it is also probably not a place where you want to remain.
Here are 10 steps to stop living paycheck to paycheck:
1. Believe it is possible.
One of the greatest hurdles to overcome for any change we desire in life is the obstacle of doubt.
If someone’s first response to the idea of no longer living paycheck to paycheck is, “That is impossible because of x,” they will never achieve it.
And it doesn’t even matter what x is. If you have decided already that the circumstances of your life are so stacked against you that you can never get ahead financially, then you never will.
The circumstances for you may be more difficult than others, but it is never impossible. Believe it is possible and that you have the power to make a change.
2. Don’t wait for more money.
Just like “this is impossible” thinking will keep you stuck. So is, “I need more money to get ahead.”
It is true, of course, that some people need to make more money to get ahead financially. But when we fall into the trap of thinking we can never get ahead without it, we never even give ourselves the opportunity to find out.
Let me try and prove this:
7 in 10 Americans live paycheck to paycheck. But why do 70% live with no financial margin? Is it because 70% of us don’t make enough money? Or is it because many of us are buying things we don’t need and spending money where it doesn’t need to be spent?
This is an important distinction. Because either we are held hostage by an unfair economic system that needs to be entirely blown up, or we just need to take more personal responsibility with our excess spending. It appears, in many cases, to be the latter.
Look deeper into the numbers and you’ll notice something important:
- 62% of consumers earning between $50,000 and $100,000 per year live paycheck to paycheck.
- 54% of consumers earning between $100,000 and $150,000 per year live paycheck to paycheck.
To put that into context, the median household income in the United States is $67,000. Over half of American households making twice the median income live paycheck to paycheck!
There are some extenuating circumstances of course, but not for 54% of Americans in the higher income bracket.
All that to say, there is no change possible if we constantly fall into “I just need more money” thinking.
Instead, the more money people make, the more money they end up spending. The time to get out of paycheck to paycheck living is now—not waiting for a big raise.
3. Make it the life change you want most.
There are more important things in life than getting ahead financially. But it is a change worth pursuing because it brings both calm and freedom into your life and family. It is a worthy pursuit.
If you are ready to make it happen, finally, I recommend making it the life change you want most. Changing the way you spend will require focus and intention. It will require a seriousness that forces self-reflection and energy.
Decide today, once and for all, this is the victory you are going to pursue in your life.
And make sure your immediate family is on board with it. When trying to get buy-in from your partner or kids, explain the benefits in a way that resonates with them. Approach the conversation clear on what it is going to take to achieve it. To accomplish that well, you’ll need steps 4 and 5.
4. See the benefits of owning less.
The most essential foundation for financial freedom is to spend less than you earn. If you cut back on your spending, you’ll be able to get out of debt and start saving. We’ve all heard that advice before.
But why is this step so hard to implement?
One reason I believe spending less is such a difficult step for many to take is because the solution sounds unattractive to so many. Buying less sounds a lot like taking a step backwards in life. In a world where success is often defined in material acquisition, spending less sounds boring, unfashionable, and destined for ridicule.
And that’s what I used to think too—until I actually tried it.
Fourteen years ago, I made the intentional decision to own less and buy less. It has turned out to be among the best decisions I have ever made in my life. As a result of paring down most of my possessions and determining to only buy things that are actually needed (rather than everything I ever wanted), I have found my life improving in very significant ways.
Now that I own less and spend less, I have more time, energy, and money available to me than ever before. Because I own fewer things that need to be cared for, I spend less time cleaning, organizing, and managing. I have more opportunity than ever before to pursue my greatest passions in life—however I decide to define them.
Rather than running up a credit card bill by chasing every new product or fashion line sold at the department store, I am able to invest in the things that make my life worthwhile and significant.
In this simple decision to buy and spend less, financial discontent in my life has been resolved. It also paved the way for more intentional living.
See the benefits—and be drawn to the lifestyle.
5. Sit down to do the math.
Overcoming the cycle of paycheck to paycheck living will require you to sit down with a sheet of paper and compare your income to expenses. But this does not have to require a detailed, track your spending every day, monthly budget.
Instead, I recommend crafting a Spending Plan. I have found it to be immensely useful in my life.
To get started, determine your monthly take-home pay (not your gross income before taxes, but your net income—the actual amount on your check or direct deposit).
Second, compare your fixed monthly costs to your monthly take-home pay. These are the expenses you currently have in your life that require some of your income every month—no questions asked. The actual monthly expense may vary (within reason) from month to month, but you know it is going to be there every month.
For example, your fixed monthly costs, might include: Charity, Mortgage, Groceries, Auto Fuel/Maintenance, Savings/Retirement, Utilities (Gas, Electricity, Water, Garbage), Insurance (Auto, Health), College loan repayment, Internet, Cell phone, Home Owner Fees, Kids’ School/Activities, etc.
After you have determined your monthly income and your monthly fixed costs, whatever dollars remain is your monthly discretionary income (the money that you have left over to spend as you desire).
This is your margin to begin getting ahead each month. If you spent no other dollars on golf outings, concerts, eating out, cinnamon rolls, or travel, these are the dollars you could begin saving and use to get ahead of your paycheck.
And of course, if your monthly fixed costs already exceed your monthly income, drastic changes to your baseline standard of living need to be made.
6. Admit that you probably spend more on nonessentials than you think.
According to one poll, the average adult in the USA spends $1,500 a month on nonessential items.
I have cited that statistic before and the comments are always the same:
“That’s absurd.”
“That is unrealistic.”
“Obviously that is only rich people.”
“No way! I don’t spend near that much.”
And to some extent, there is probably truth to those replies. Since that’s the average number, roughly half of us spend below that amount.
But if we are ever going to stop living paycheck to paycheck, we need to admit at some point that we probably spend more money on nonessentials than we care to admit. Once we start buying things and bringing them into our lives, it becomes very easy to no longer imagine life without them—and we start to consider them essential.
Consider this, you may not think you spend $1,500/month on nonessentials. But even if you spend half that amount ($800/month), you could save $10,000 next year by simply not buying things you don’t need.
7. Put your savings into a different account.
As you begin to see the benefits of owning less and change your spending habits accordingly, you’ll spend less.
Open a new account at your bank or use an online bank (Capital One, for example) to store those funds. Transfer money every month—automatically or manually. Pick an appropriate dollar amount and transfer it at the beginning of every month or pay period.
Only check the balance in your new account twice/year. Just let it grow slowly every month.
Taking the money out of your usual spending account will keep you from spending it.
If you need a goal to save towards, one paycheck worth in savings would technically remove you from the paycheck-to-paycheck statistic—and that’s the goal here.
Other experts recommend saving 3-6 months of living expenses. There’s nothing wrong with that goal, but it can seem very difficult to someone struggling to just get ahead of one paycheck. So I recommend choosing “one paycheck worth in savings” as your first goal to work towards.
8. Embrace a No Spend Period.
Commit to one month of buying nothing. (Except for some obvious exceptions: food, utilities, health, etc.)
No-buy experiments offer lots of benefits: They help us save money, reset consumeristic tendencies, provide time for other endeavors, and are environmentally friendly.
There are wonderful examples of people who commit to no buy experiments for an entire year—or even longer.
I have never set out for a year-long experiment, nor have I ever had the desire to do so. But I do find inspiration in their example. I see it this way, “If someone else can accomplish this experiment for an entire year, then surely I can do it for one month.”
For most people, just one month of not buying anything would result in almost $1,000 in savings. You might be closer to overcoming paycheck to paycheck living than you think.
PS: It’s important to mention here that getting ahead financially does not require lifelong changes. Adjustments in the short-term alone can help you reach the goal of putting one paycheck into savings. That’s why the predetermined no-spend period can be so helpful.
9. Don’t be afraid to consider drastic changes.
Cost of living numbers vary widely from one part of the country to another. And I can understand why making drastic changes may not be possible for some. But that should never keep us from considering them.
Maybe you are happy living paycheck to paycheck because it allows you to live in a certain part of town or the country.
Of course, if that is the case, you probably didn’t click to read this article in the first place. But if you did, and your mind constantly races to “you don’t understand how much it costs to simply live in my area,” you might be right. And you can always continue to choose that.
But any time we want something new for our lives, changes are required. Sometimes small, sometimes drastic. Don’t be afraid to consider all of them.
10. Be gentle with yourself and give yourself some time.
Overcoming the paycheck-to-paycheck lifestyle is possible. But it may not happen right away, it might take some time. Especially if we have families to get onboard with the decision.
And with any change that takes time, there are bound to be some setbacks and mistakes. Work to intentionally eliminate as many of those as possible, but be patient with yourself when they occur.
Two steps forward and one step back is still one step closer to your goal than never trying.
7 in 10 Americans live paycheck to paycheck. But you don’t need to be one of them.
Katrina says
I came to the internet hoping to find real advice for my situation. I worked for a company, and on company time broke my hip. They figured how to get out of paying me worker’s comp, short term disability and any other pay that would have alleviated the stress of breaking my body (I’m 32 and perfectly healthy.) Had I backup money to hire a lawyer, you bet your bottom dollar I would have! But I made JUST enough to pay my bills and that is all. Fast forward to now; I am still experiencing longterm issues from my body being crushed by a 2,000lbs peice of equipment, am unable to get a job that requires lifting or standing for long periods of time, and employers won’t hire a broken person…despite most people saying “that’s illegal” in an at will state. So now I have a job at a convenience store that pays a smidge over minimum wage. All of my bills are behind, I am soon to loose my vehicle (my job is 45 minutes away and there is no bus route from here) and this article says just spend less….hmm. What is it that I’m supposed to cut back on? Food? Utilities? My husband makes enough to pay the rent on his own, but that is literally all he can pay. The car will be repossessed which means he too will be out of work unless he can find a ride. (Common theme amongst the poor is that not many, IF any have vehicles.) F***k this article. I don’t believe the income numbers, seeing the lines of people waiting on food banks, or for housing authorities and praying they won the lottery to get an apartment or even a room. If anyone has REAL advice on how to survive I would dearly appreciate it. I know we’ve got it better than most, but I’m trying desperately to keep it that way. I suppose it’s not the first time I’ve been homeless, but I sure do love having a shower and a private toilet.
Virginia says
Maybe, just maybe, this article isn’t for you. Maybe it’s directed to people living paycheck to paycheck. You seem to have mistaken it for an opportunity to unload about your personal situation which has nothing to do with paycheck to paycheck. I’m sorry you’re having difficulty but you don’t have to vent your anger and frustration on this guy..
Ginger McCormick says
Agreed! My heart goes out to this person. But the article is spot-on. I’ve seen other studies that show the exact same thing. People need to live on a budget and prioritize their spending. Everyone has an excuse (and some may be very valid. However, 50% of the people do not – let’s take accountability!
Joseph says
Lucky to find $12 an hour around me and the absolute cheapest housing is $1400 a month, after the drug dens upped rent. Even one bed houses are being cut up and rented out at around that rate per tiny section (which should be illegal). That’s also while living in what is rated as one of the cheapest states in the country AND one of the cheapest cities of that state. But no, it’s totally about spending too much.
It’s nice to be told from people who don’t get it that the problem is spending too much, especially after literally eating from the trash recently just because it had been two weeks without eating, which is pretty normal for me.
It’s also a shame how repetitive and worthless this list is.
1. Believe
2. Save
3. Save
4. Save
5. Save
6. Save
7. Save
8. Save
9. Save
10. Be nice to yourself
Okay. In other words, if you ACTUALLY don’t make enough and are having troubles finding any job that will pay enough, you’re living on the street (I literally spent six months, last year, being homeless just to try and save up a tiny bit while at my job, bouncing to couches if I was lucky, or finding a park bench), and you genuinely don’t make enough, then 2-9 doesn’t apply, because they’re all worthless variations of “Save more money. Let’s be honest, you’re irresponsible”
I’ve been wearing the same shoes for the last nine years and bought ONE book on sale, as a treat for when I got my last job after a year and a half of no luck, which nearly bankrupted me. I don’t want to be rich. I just want to afford even one meal each day and basic hygiene supplies.
It’s getting really hard to continue to see people in their three or four cars and two story houses complain about only getting a 10% raise and sitting in meetings, doing nothing all day, or talking about how they had to sell their summer homes. Oh poor you. You have so many houses that you had to pick one to get rid of while others are on the streets, not by choice, and getting chased by police.
We’re in a country that pushes to hoard wealth to the point that people can’t afford to live, then punishes those who can’t for daring to be homeless, as though it’s fun and what they wanted.
Jesta says
Thank you so much for speaking up and sharing this!!!
Minimalism is only minimalism if it is a choice.
If it’s not a choice it’s poverty. And poverty is always based on injustice! We all deserve to have enough. Just because we are and we exist and we’re human. And we’ve got enough for everyone! Look some people even need help cutting down their too-much to get out of overwhelm…
Thank you again for your voice here!
All the best to you! I see you and I hear you!
Ismaila Yakubu says
When you said, “Minimalism is only minimalism if it is a choice.
If it’s not a choice it’s poverty,” I felt it deep down my heart.
Thanks again.
Jg says
I have been reading more and more about this. The cost of living significantly outweighs the amount people are making. It seems worse in some parts of this country. I think there are great and hardworking people that just can’t get ahead. Living in their cars, but working 2 jobs., etc.
This is a real problem and it has gotten worse. We have a program that the churches and community supports to give people places to live while they get on their feet. They can only take one family/individual at a time and they get help with financial literacy and finding jobs.
I hear you loud and clear and wish you better than your current situation.
Valerie says
I live on nothing… seriously. Credit card debt is sky rocketing – but it is because I am a single mom who feels that cooking clean healthy food and devoting time to the outdoors and reading books with my child, getting good sleep and learning through life events being involved with our community to for good to others ranks higher than making ‘money’. I am working on getting a good ‘work-from-home’ job – like building my seamstress business, or helping ‘here & there’ to pay the rent, grocery and utilities. Other than that, we have it ALL! We have so much fun! We live in a studio apartment that backs up to a 4 season park. I don’t have a car because we can walk to all we need, and take the bus to the rest. That was my way of simplifying life. I cannot believe how I achieved this, but it was ‘little by little’; changing the mind then the action. We eat so healthy, it is hard to go eat anywhere. We don’t have money, so enjoying God’s free gifts in our community lends us to a life that iur friends are jealous of! We don’t live ‘on screen’ so our phone/internet bill is $20/$30 using Google Fi. Life is good – work at your happiness – dreams come true! Imagine living on $1400 a month comfortably. It truly is possible:)
Cynthia says
I live on the same amount each month. I, also, have Google Fi. I’m retired, but even with the slight increase of Social Security, it doesn’t cover it all. I’m VERY thrifty. All it takes is a couple Dr. Visits and a handful of car problems, a few home repairs and you’re over extended.
I just crunched my numbers and in 29 months of this current economy, it means I’m over extended every day by an average of $17/day. May not sound like much, but 870 days multiplied by $17 is $15,000! Wonder how many of us are trying to eek out a life on less than $20k per year.??
Don H says
Freefornow, your feedback to Elizabeth was extremely disparaging. Elizabeth connected with many readers real life plight. News media organizations rarely pen articles reflecting the daily struggles of the working and retired poor. Most commenters who post don’t express all that they do to survive. Many like you leave feedback to those struggling to survive have already executed or looked into. It’s not ” being negative” to express reality. Poorer working and retired adults struggles are weighed down by emotional factors that the fortunate well off don’t encounter. Great income earners have better means to deal with debt and lack.
Liberty Torch says
This is a slap in the face to those who work hard for poverty wages in the richest country in the world.
I don’t wish poverty on my worst enemy, and I know who she is, by name. That should say something.
The financial success of the top dog should NOT equal the financial failure of the worker on the ground, who is making said top dog rich.
The minimum wage should be a livable wage that also offers the chance toward upward mobility.
For all you rich fat cats paying your workers poverty/starvation wages, start paying them a minimum of at least a livable wage, or burn in the deepest part of hell.
Also, there should be a law where the head honcho cannot make more than 20 times the lowest paid worker. This means that if the CEO gets a raise, so does the janitor.
And no, they WON’T have to raise prices. The head honcho can be less rich. NOT poor, not starving, just less rich. If they want to get richer, then they’ll need to save money to expand their business while still paying their employees a minimum of a livable wage, and nothing less.
Minnie Moody says
👏👏👏👏Yes Yes Yes! And God bless you if you live in an area that was destroyed by natural disaster and then a pandemic hit that closed what few businesses that had rebuilt an reopened. And hope your not an elderly person that has to try an get by on what little social security you can get after depleting your 401 and savings just to make your house livable again. And please pray for all the grandmothers, aunts,cousins etc who stepped up to adopt the children because their parents died. We can all use a hand up at sometime in our lives. We never know just how secure we are until disaster strikes and the unexpected death of loved ones. In looking at the amounts of money that some live on and knowing I raised children making seventeen thousand a year, yes that’s poverty and living pay check to paycheck. I can tell you it makes you old before your time, the stress alone is enough to cause health problems.
AJ says
Become a minimalist? We have companies making record profits this year and not one word about raising the minimum wage. Don’t put the blame onto the citizens for being poor. Raise the minimum wage. If the minimum wage rose at the same rate as inflation, the minimum wage right now would be around $25 an hour. Social security and disability should be raised as well. People shouldn’t be living paycheck to paycheck and have to count every penny. These comments here are sad and not just because of the suffering people are going through. It’s sad that people here have been brainwashed into thinking they don’t deserve a higher pay rate. These companies can afford it.
Corporate profits in the U.S. surged to an all-time record of $2 trillion in the second quarter of 2022 as companies continued jacking up prices, pushing inflation to a 40-year high to the detriment of workers and consumers.
LS says
AJ…you don’t know too much.
I can’t even respond intelligently to your reply because your comments are so ridiculous. I’m guessing your neighbors don’t like you.
Jamie Arballo says
Inflation is not going to change anytime soon. The way and price of living is not gonna change anytime soon. It’s 2022. Not 1995. It’s the way it is, everywhere in the U.S. Crying, whining, hoping and waiting is not gonna do anything to help the situation. So you can sit there and continue to wait for a “change”, or make one happen within yourself, for yourself. Be happy man. Your obviously paying for internet. Lol. That’s not the “poor” bracket. Internet is a luxury. Stop whining or run for president. To the person who wrote the main article…. Good stuff. And I appreciate your advice. It only makes cents. 🙃
Joseph says
They’re not obviously paying for internet. That’s a privilege to assume. I’ve spent hours walking from one end of town to the other just to access the one underfunded public library to apply for jobs and seek advice, only to get this crap list, 8 of which are just “save money and stop spending” which isn’t an actual option for many
Albert says
You’re rude AF. This country was built on the foundation that the people control the country. But the rich do and the government holds down the poor. This system needs people to rise up and make a change. You’re just trying to crap on other’s misery which is absolutely despicable!
TrollBait says
Your comment is what we call “irony”.
RM says
AJ is actually correct. Minimum wage does need to increase to reflect, inflation and increase cost of living especially rent (note the increase in houselessness) and APR on mortgage loans and Refi.
Deirdra Reed says
Thank you 🙏🏾
Alisha Lehr says
Correct. I’ve been reading all of the comments on here. Congratulations. You are the WINNER. 🏆
Grace says
AJ, you are absolutely correct, and said it so well. This country’s pay rates have not kept pace with inflation or with how much productivity has increased (huge!). In the USA “minimum wage” could more truthfully called “poverty wage.” And before anyone tells me minimum wage jobs are only for teens, go to your local Walmart and see how many senior citizens of the USA are working for minimum wage into their 70s, 80s, and even 90s to supplement their social security. And the company they work for has record profits each year on the backs of the elderly they employ!
Badass Mom says
I’m a 60 yr old of 4 children ages 32, 31, 19 & 17. Side hustle work, self employment, live frugal, go to food banks, migrate to a lower cost of living in a job growth state and change careers to chase $$. I’ve changed my career 4 times. Been a single mom twice with deadbeat dads for a total of 20 yrs. Put my 2 older children thru college with no help from their father & they’re debt free. I rent out my home in another state. Younger kids are working part time. I will support them in college when they’re ready. I used my stimulus money to buy Jackery solar generators & camping stove & low voltage heaters should we have a power outage during winter and I run out of firewood. In 2021 I decided to move to a low cost (not low income) apartment home because I knew rent was going to increase in 2022. I lucked out & found a 2/2 with fireplace for $985 for 13 month lease. A month later after I signed the lease it increased to $1270. Next month my $985 will increase to $1170 but really after trash, sewage & water it will be $1250. I’m always applying for electricity help. This past summer my old income qualified me for $2058 in electricity credit starting this month. It should last 20-24 months. My average bill is $150 per month but I’ve adjusted the new thermostat to average $89-98 per month. After summer ended I had a promotion increasing my net income to $800+. And I just was hired as a Trustee starting next month for a nonprofit that will pay me a stipend of full air & ground transportation, all meals and $2500 every 4 quarters in a year for meeting attendance. For a 3 yr contract. That’s my side hustle bringing an average of $833 a month. Total that up, I’ve increased my net income to $1633+ a month for the next 3 yrs. I also average $4k in tax refunds that will probably end by 2026 per my calculations. I live minimalist. still supplying my food storage for emergencies. Use credit card when need to buy with new changes in my net income I should be debt free ($8k) in 6-8 months. I have a strict budget through 2030. At 65 I receive pension from my early retirement in 2000 from state govt job I left in another state.. At 67 planning on getting my benefits with SSA.gov and continue to work in State Govt as I have in the last 5 yrs. I will live at this low cost housing until 67 and find a gated community I can afford being more comfortable. I’m insured for cancer & life and will not be a burden for my children leaving death & burial. They will be taken cared of. Learn to sacrifice, bring lunch to work or spend no more than $6 on buying lunch. My older children side hustle as well and understand being frugal and save for what you want. #happylife
Growing Old Mandatory Growing Up Optional says
Bad ass only begins to describe you. This reader’s opinion: send your comments out as a story; or a “how to” book, or start a blog, website, do the morning shows as an expert in raising family investing, etc.. you gave so much smart information in your response while being inspirational, relatable and inspiring. the fact you do what you do, you still had the time to engage in this forum to the degree you did. you. Your words are going to stay with me and I’m going to use that to be a better me thanks! (Fellow single mom)
Just saying says
Sounds like you’re the problem tbh.