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.
Ruth A. Guyer says
I only make 1,000.00 a month. I am disabled on S S.I. i live pay check to pay check. I pay all my bills. I only get 100.00 in food stamps, that doesnt buy 2 weeks of food. I fill my truck every month once. I dont go out to eat because i dont have the money. If i am lucky i have 5.00 or 10.00 left each month. There no way your 10 ideas work who cant afford to live. Cant work because of my disabilities. i have brittle bone disease, i broke my back 2 times. Broke left hand 4 times. Right hands 3 times. Broke both feet. Broke left knee. I have arthritis every where. I have Medicaid but they dont pay for all my meds.
Alisha Sierra says
Something to look into, maybe it can help a little, hospitals. Obviously you get around because you have to put gas in a vehicle. If you are close enough to a hospital maybe they have free breakfast. It’s a meal you wouldn’t pay for leaving you with a few dollars more every month. I’ve been there, with kids! Sometimes you can take an extra meal with you. Lunch is lower there than fast food also. Look around, I hope you can get more help, don’t give up.
Resourcelady says
If you were married 10 years or more you could apply for benefits under spouses income.
Why are you not on regular social security disability instead of SSI? If you’re 55 or over it should apply and probably receive more income.
Resourcelady says
See about Meals On Wheels program in your community. There should be a County or State runned Senior Community Center that can provide you information. They bring it to your home or at a senior center.
Christine Philbrick says
I am sorry to hear of your circumstance
That sound really difficult, you must be a fighter and a very strong individual. I hope and pray 🙏 for. Thank you for sharing your life with people. It’ encourages others in more ways than one. God Bless you and keep your eye on the prize☝🏼
Alicia says
Are you able to work at home? If you have internet and a laptop (not chromebook) look up working solutions website. They have work from home jobs. There are others. I wish you well!!
Poorlygirl says
Questions, I’m legally separated, am I qualified to get SS benefits when he die?
Resourcelady says
If you are married for 10 yrs or more you can apply for benefits under a spouses social security number. You will need the spouses certified birth certificate and marriage certificate.
Aishah says
Hi Dear Readers, please read & learn about the autobiography or simple lifestyle of Prophet Muhammad (may peace and blessings of Allah be upon him) He is the Prophet of Islam and to whom The Quran scripture was revealed. Also, read, study the Quran which is the direct revelation of Allah or The God.
Barnibus says
This isn’t a subject of religion… it’s how to improve your spending habits and do responsible research into what helps you survive during inflation periods.
Religion isn’t the topic here unless it helps those in distressful situations increase their income.
How does your particular religion help people in this matter whether they are religious or not?
JJ Johnson says
I feel for many people when it comes to financial problems…but others…not so much. I am now retired and have worked since I was 16 and before that I mowed yards. Even now I work a parttime job. From ages 40-retirement I worked a fulltime job plus 3 part time jobs.
People that were younger that couldnt make ends meet…..why did you decide to have 3 and 4 kids? Why did you decide you needed a new car? A new house? Eating out and delivery mire than eating at home.
I know many people do not have great health. I had cancer at an early age but other than that have been fairly healthy. BUT I do not go to the Dr. everytime I get a headache either.
I am not saying dont enjoy life….but you cant blame wveryone else else for the problems you created.
My bills get paid and I have absolutely no debt….and I travel when I can.
Andres Medrano says
How about when your over 65 and living on SS and no other income?
Concerned says
You spent your entire working life without saving an additional dime?
Don't Judge says
It’s harder than you think just saving pennies let alone dimes.
Toni D. says
You need to pare down to the basics. I was deep in debt and living week to week twenty years ago. It was a vicious cycle. Once we made up our minds to get ourselves off this spinning hamster wheel, things began to change. We paid down our debt and let go of a lot of non essential things. I became extremely thrifty which continues until this day. I’m now teaching my two grown sons to live on very little and make saving a priority. Money equals freedom to me and living large just creates undue stress.
Angry and Poor says
Yeah what about those living paycheck to paycheck that make 30,000 a year. In a state like California?
I don’t have internet, so I don’t pay for subscription services, I sometimes have to go without essentials and I haven’t had new clothes in a few years, all income goes to paying medical bills, insurance premiums, bus transport
and food. Even then, I sometimes dont have money for food. Sometimes paycheck to paycheck is all we have. There is no other option.
joshua becker says
I’ve never lived in California, so I can’t speak to the possibility of getting ahead financially on $30,000/year firsthand. If not, that’s where Point #9 comes into play.
Aishah says
I believe sometimes drastic situations cause for drastic measures.
Like taking your paycheck and moving someplace less expensive.
Aishah says
Please read the autobiography of Prophet Muhammad may peace and blessings of Allah be upon him and see what a simple lifestyle he lived although he was head of state for 23 yrs.
Aishah says
I agree 👍 💯.
John Seale says
I hate to be that guy, but California is one the most expensive places to live in the country. Your takehome pay is far less than a lot of folks due to heavy tax unfortunately. Any way for you to bump up that $30,000? Maybe a combination of trimming and side hustles? Job change?
Lisa abbott says
This poor guy lives in a state that is extremely expensive but I must warn you that the state I live in has the highest taxes. And our state loves to tax everything, they would tax air if they could! It hasn’t always been this way. Many people have started to move out of this state because of this. Us included. We’ve done everything in our ability to simplify, live smaller, smarter. No credit cards, no cable, no car payments, barely a grocery bill (we have a garden and the kids have moved out), no medical bills, no frivolous spending. Several side hustles going on and both of us have full time jobs. Still can barely make it each month. If even one item needs repairs or replacement we’re super close to homeless. I was told by my parents that as long as i worked hard and made smart choices that I would do well……they weren’t lying, they just had no idea what was ahead for us all. Our kids can’t afford to purchase their “first home” like I was able to, they can barely afford to rent an apartment. Starting a family is put on hold for many of our kids because of this. My oldest daughter often says to me “wow mom, It sounds like so much fun and so exciting and so many things were so much easier to get in your time”. And I can’t lie to her so I say ” yes, it really was”.
Aishah says
I believe sometimes drastic situations cause for drastic measures.
Like taking your paycheck and moving someplace less expensive.
Jane Young says
First advice is to move out of CA.
Theresa Winn says
I appreciate these very practical steps but have a HUGE disconnect. To me this is like Google offering employees mindfulness training as a way to cope with increasing work demands without compensation.
The cards are stacked against those on the fringes. And I never knew I would become one myself.
I was a stay at home mom and educator for most of my life. Now, I find myself divorced, 58, recovering from breast cancer treatment and oh yeah, broke. There will be very little social security for me because my work was unpaid.
And there are so many more women out there in this same situation. Maybe not with the breast cancer bit. But women who devoted their lives to their family and now they are left with a sh*t sandwich and living in poverty.
And I’m one of the lucky ones. I am educated, hard working and have a wonderful circle of loved ones.
But I still lie awake at night wondering how on earth I’m going to pay for the deductible when it rolls around in January again. A breast cancer diagnosis ensures you will have many medical bills for several years. I can only hope my health will hold out as I rebuild my new life.
Rent prices continue to grow as large corporations take over housing. We are held hostage to fuel prices. Grocery prices and shrinkflation are rampant. Taxes, regulations, etc.
I am the queen of thrift and side hustles. But these obstacles cannot be understated and are not remedied by Craigslisting your doo-dads.
Our country has been systemically removing every social safety net. For those with mental health issues-do we just tell them to work hard and figure out something? Just get over their issues? What about the poor people with six-figure medical debt? Should they just do the Dave Ramsey suggestion and deliver pizzas in between chemo sessions?
I don’t mean to sound snarky. Nor am I speaking rhetorically. This is REAL stuff I speak of.
I appreciate the statistics, sure.
But there’s got to be a deeper discussion on this.
Chiriac Larisa says
First you should ask the pourcentage of success of chemotherapy in your case research based.Drop the chemo if it is lower than 50%!
Would you go to a party if you have less than 50% chance to have fun?
Fuel your body with plant based nutrition and there you go a big economy (no meat,diary,soda,junk food)
jim neil says
How long were you married? If more than 10 years you can get social security benefits based on your ex husband earnings
Diane says
When you reach 62 you can claim Social Security on your former husband’s record as long as your were married at least 10 years. It doesn’t impact the amount he receives. I am still married but since I was primarily at stay at home Mom we decided to wait until full retirement age for me and 70 for him to maximize our social security income. I receive 1/2 of what his benefit would have been at his full retirement age of 66. If he dies before me I receive 100% of his benefit. You can also claim your previous husband’s full benefit if he dies first even if there is another wife again as long as the marriage lasted at least 10 years. Both wives can claim with a minimum of 2 year marriage for a current wife.
Also check your divorce decree. You might be entitled to part of his retirement income.
Lois S. says
have his full name, date of birth and social security number. bring marriage and divorce papers with you to prove length of marriage.
Poorlygirl says
Questions, I’m legally separated, am I qualified to get SS benefits when he die?
Jennifer S. says
Amen!!! I’m right there with you sister!!! We have to do more of this … speak up and out. Make our legislators vote for more programs that create safety nets
ELIZABETH FREE says
Amen and Amen, Theresa Winn!! I am an underemployed Autistic single parent of a son also on the spectrum. Autism isn’t a mental illness, although it also often includes a dozen or more comorbidities (ADHD, IBD, OCD, CPTSD, epilepsy, and as a result if that develop anxiety and depression. Our average life expectancy is 54, proba ly because we’re 10x more likely to contemplate suicide and 6x more likely ro succeed.
I work a FT office job, 2 pt evening jobs…and I’m *still* living paycheck to paycheck. This is a horrible time to buy a car, even a used one, so back when the ice apocalypse hit, I did my own plumbing, carpentry and sheetrock repairs. This year alone I have replaced my own radiator, alternator, evap solenoid, Vtec solenoid, 4 tires, braking module..and now someone stole my catalytic converter. I work my @$$ off and am extremely resourceful, and I know how to do without. I cannot afford the medical care and therapies we both need in order to progress rather than just merely survive. Perhaps if more than 10% of the total money spent on autism actually went toward HELPING autistics rather than trying to prevent or cure them, we’d actually have a chance at breaking even in the world. As it is, these luxuries have never been an option for us. I challenge anyone to find one more corner I could cut. THE PROBLEM IS GREED. It is the wealth who do not want to go without and are willing to nickel and dime others to gain more profit margin in a recession than they did before it struck ..just to ensure they never have to know what it looks like to have to operate within the boundaries of common sense.
T. Stanfield says
U definitely hit the proverbial nail on its head
Flutterby317 says
Well said! Autistic mom of four here. My husband and two of my kids are also on the spectrum. In addition to this, I deal with PTSD and EHLERS-DANLOS, things everyone seems to think I can just easily “get over”. Not necessarily so. We survive through a combination of working for ourselves and my husband’s full-time job he works butt off on for peanuts. Never buy on credit, no extras. This month becomes especially hard because our last name means our skyrocketing property taxes and car tags come due, so there’s always that to scrape together in addition to regular bills. Merry Christmas to us. Now, don’t get me wrong, we always make it. It’s quite miraculous many years actually. But, this concept there’s always something to cut is oblivious at best and, at worst, evidence of how callous some are to the problems people in our position face.
Phyllis Miller says
Your making it is a miracle from the one true God Jesus Christ who sees you& your needs and is the ONLY person who can change our circumstances.
Gloria Monroe says
Absolutely correct
Lace says
Your comment is the best one because this is so true!
Elizabeth Wolfe says
Thank you for xplaining some of the many ways that people become DisPossessed of Everything. Best of luck with ya.
Drue VanLake says
amen Sister. We need real help!
DonnaMartin says
Theresa- You make realistic and valid observations, all worthy of consideration. Its not very often that I feel a connection; like someone actually knows my feelings, while I sift through the comments of an article I just read. Even less often do I comment on one. I don’t need to comment on this one either, as your reaction says everything I would have, and better. At 53, there’s nothing worse than fearing you could end up homeless again. I’ve managed to keep a home for over a decade, but not without struggle. I appreciate what I have. They say money can’t buy happiness……but the lack of it can sure make you miserable.
Free4now says
The very beginning of the article addresses what I see to be one of your problems, a negative attitude. Having breast cancer is a tough thing everyone agrees. But to ask us to assume that having 6 figure medical debt requires one to deliver pizza inbetween chemo is ludicrious. You can file bankruptcy , ask for a charity waiver of cost from the medical facility which I’ve recently applied for myself and my husband has benefitted from in the past, or seek help from cancer treatment non- profits. I’m assuming you have enough funds to keep a roof over your head and food on the table. I’ve worked in the legal field in large debt negoiation and in banking so I’ve seen and heard it all. I remember cases where people were spending $400.00 on drycleaning , living in large homes with plenty of equity , but were cash poor and refused to sell and scale down when advised to sell , people who eat out every single meal etc. I could go on forever. This article was designed to get us all thinking about saving money and living on less. Every single one of us can cut out stuff and eat healthier and cheaper. My husband and I 70 and 63 years old sat down and within 30 minutes cut our expenses by over $150 a month and we’re just getting started. I learned to cut my own hair and his which I calculated to save us at least 300.00 a year. I can’t get the professional dye job I used to get at 220.00 a whack ! We have to learn to stream better to get rid of Dish network cable T.V. We’re shopping for cheaper cell phone service, combining trips in the car to save gas , eating vegatarian 3 days a week etc. So lady what can you cut out ? Try starting with cutting out the blaming of society , the government, oil companies, groceries stores and landlords for your problems. Oh, and too bad you can’t take back that vote for Joe Biden you obviously cast.
Reggie Clark says
Oh no ….you didn’t vote for Joe did you?
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.
Vance Harris says
I so feel for you. For too long women have not been recognized (compensated) for raising children and taking care of the necessary work in their homes. This is reflected in Social Security as well as EIC. Both my wives were divorced from deadbeat husbands and only found the help they needed after marrying someone with benefits.
The reforms made to the Child Tax Credit brought phenominal change to many one-parent households, but it expired.
Why anyone would vote for a repressive republican is beyond me.
Jane Young says
If you were married for 10+ years, you are eligible for you ex-husband’s social security benefits.
The article is spot on. Josh is not going to save everyone’s employment issues or rate of pay. He’s advising us how-to cut back and save so we don’t live paycheck to paycheck.
Tannis says
I put $40 in an envelope every Friday. I now have $6000 saved. If only I could get my husband to agree to selling the cottage we would be out of debt in no time. His emotional attachment to the place seems to overrule common sense.
Bpax says
I try to carry cash all the time and spend it in a very limited amount to discipline myself from useless shopping in NYC, I say to myself that if I tend go over that set amount, that means I’m done for the week. But I still carry my card for emergency situations.