8 Ways to Stop Living Paycheck to Paycheck

Photo by WAYHOME studio / Shutterstock.com

Are you stuck in the all-too-common habit of living paycheck to paycheck? You don’t need me to tell you that it’s a self-defeating cycle. You simply can’t get ahead this way. But escaping isn’t easy, especially if your paycheck is tight. Change involves not just the hard work of making new habits but, at a more-basic level, changing your ways of thinking.

And yet, people do make this leap. They pay off huge debts, reach ambitious savings goals and turn their financial lives around. If you intend to be one of them, here’s an eight-point road map:

1. Forge an independent spirit

Mila Supinskaya Glashchenko / Shutterstock.com

Some people save money easily and intuitively. Others must come to it through struggle. If that’s you, becoming independent from the habits and opinions of your friends and family is crucial. You’ll need to stop trying — consciously or unconsciously — to keep up with the lifestyles of others, especially the spending habits, trends and consumption among celebrities and in the media.

When the pressure is on to spend, it takes a strong individual to buck the current. You must listen only to your own drummer. Keeping up with homes, cars, fashion, vacations, sports equipment or even makeup choices of others will sink your financial ship as reliably as if you had a gambling habit.

Read: “10 Characteristics of Wildly Successful People”

2. Make saving painless

Yeexin Richelle / Shutterstock.com

What are your dreams? Whether they include a comfortable retirement, launching a business, putting kids through college, buying a new couch or buying a new home, you’ll need to translate those dreams into savings goals to make them a reality.

Setting concrete goals also helps motivate you, making saving easier. After naming your savings goals, set up automatic withdrawals from your paycheck to savings or a retirement account so you’ll never see the money or miss it.

Keep on increasing the percentage of your paycheck you save. Start by saving at least enough to earn your employer’s maximum matching retirement account contribution. Then, make small but consistent increases to save 15 to 20 percent or more of your earnings. For example, if you’re saving 6 percent of your paycheck now, bump it to 7 percent, and then raise it again later in the year. When you get a bonus or a gift of cash, divert at least a fat chunk of it into savings, too.

Read: “7 Ways to Make Your Savings Grow Faster Automatically”

3. Live on less than you earn

conrado / Shutterstock.com

Well, duh, you say. But it’s not as obvious as it seems. When you spend less than you earn, you can save. If you spend everything you’ve got, you can’t save, and with no savings, it is nearly impossible to get ahead.

The Pew Charitable Trusts used government data recently to look at Americans’ spending versus income. When the recession hit in the first decade of this century, both household income and spending took a dive. Today, spending has returned to earlier levels. But incomes have not.

“By 2014 (the latest numbers), median income had fallen by 13 percent from 2004 levels, while expenditures had increased by nearly 14 percent,” Pew says. That clearly describes an economic problem that’s bigger than our individual households. And yet, we have to work with what we have and those of us who are determined to get ahead simply have to spend less than we earn so we can save.

The solution is simple. But it’s not easy. Stop spending money you don’t have.

Read: “7 Ways to Build Willpower That Creates Success”

4. Cut your housing costs

Ai825 / Shutterstock.com

Decisions about housing are super difficult. Traditionally — before the housing crisis– consumer experts advised keeping your cost of housing at or below 30 percent of household income. Housing was called “unaffordable” over that limit. Today, though, many Americans are spending more and housing costs keep growing.

High housing costs are a budget-buster because housing is typically a household’s biggest expense. The lower your income the worse the housing problem is, since it consumes such a big chunk of your income. In 2014, households in the lower one-third of incomes spend, on average, 40 percent of their incomes on housing, Pew says. Renters in that same income bracket spent nearly half of their income on housing.

You may need a radical lifestyle change to solve this problem. Take a clear-eyed look at your options, even though you may not like them: Move out of your neighborhood, out of town, out of state or in with relatives, or share lodging with others. If you continue spending so much of your income on housing that you can’t save, you are probably limiting your possibilities going forward.

Read: “15 Cities Where 4-Bedroom Homes Cost Less Than $115,000”

5. Learn to cook

African American couple cooking
Uber Images / Shutterstock.com

It’s always been cheaper (and healthier) to cook at home than to eat out constantly, but the benefit is growing. As CNN Money reports, relative to the cost of a restaurant meal, groceries are becoming cheaper, despite high prices for beef and eggs. The average price of a restaurant meal grew by 2.7 percent between 2015 and 2016.

Falling back on drive-through meals, even when ordering off the dollar menu, means, says Investopedia, that you can “wind up spending $300-$500 a month on eating out.” You’re spending even more if you are buying breakfast and lunch out, too.

Unsure how get started cooking at home? You’ll find lots of guidance and tips at MoneyTalksNews. A few examples …

Read:

6. Get comfortable saying “no” to the kids

Brocreative / Shutterstock.com

If you are giving in to your kids’ every request and demand, you are doing worse than just emptying your bank account and making it impossible to get ahead: You are creating young adults who will have problems with overspending, people who have been deprived of the chance to experience living with reality.

If your children’s demands are driving your spending in a way that, at heart, make you uncomfortable, you may be failing at one of the essential tasks of parenthood. And that’s true of adult children as well as young ones. Turn things around by setting a household budget that sets realistic limits for spending and then, adjusting it as you go, stick to the limits you’ve set. Mother Nature Network has excellent guidance on how to set and enjoy family spending limits.

Read:

7. Know where your money goes

Monkey Business Images / Shutterstock.com

Some people swear by budgeting. Others are happier just tracking their expenses. Do you prefer vanilla or chocolate? Spring or autumn? Mountains or the beach? How you get there is a personal choice, just make sure you can see where your hard-earned money is going, right down to the last nickel. Keeping a careful eye on your spending is critical to getting a grip on overspending.

Read:

8. Drive a used car

View Apart / Shutterstock.com

Buying a new car is like throwing money into a rat hole. Unless you have money to burn, it is one of the worst financial moves possible. New cars lose 60 percent of the original purchase price in the first five years, on average, according to Kelley Blue Book. In its first year alone, the average new car depreciates 36 percent, Kelley says.

Since most of the depreciation happens in the car’s first two years, buying a 2-year-old vehicle is a much better deal than buying new.

Read: “How to Lose the Most Money Possible When You Buy a Car”

Finally, take heart in knowing that one of the greatest rewards of breaking the paycheck-to-paycheck habit is that you’ll feel much less stressed-out. Life settles down when you’ve made those spending decisions in advance, based on values and realistic limits. Having decided what’s important frees you from agonizing over each spending choice.

What strategies have you used to keep your finances afloat? Share with us in comments below or on our Facebook page.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
10 Mistakes That Cost You Money at Warehouse Stores
10 Mistakes That Cost You Money at Warehouse Stores

Wholesale clubs might have great deals, but these mistakes will cost you.

6 Groups Who Cannot Rely on Social Security Benefits
6 Groups Who Cannot Rely on Social Security Benefits

If you fall into one of these groups, don’t assume that you will receive benefits.

5 States Where Drivers Pay the Most for Car Insurance
5 States Where Drivers Pay the Most for Car Insurance

Auto insurance will cost you more than three times as much in one state compared with another. Here’s how to lower your rates no matter where you live.

Marooned at Home? Earn Some Cash Playing on Your Computer
Marooned at Home? Earn Some Cash Playing on Your Computer

Earn cash by reading emails, taking surveys, playing games, shopping and signing up for offers through this website.

7 Surprising Things That Damage Your Credit Score
7 Surprising Things That Damage Your Credit Score

A seemingly small stumble can cause your credit score to plummet.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
If You Find This Thrift Shopping, Buy It
If You Find This Thrift Shopping, Buy It

This iconic dinnerware is prized for everyday use as well as reselling for profit.

20 Things That Are Actually Worth Stockpiling
20 Things That Are Actually Worth Stockpiling

You don’t need a year’s supply of toilet paper to survive an outbreak, but consider stocking up on these items.

9 of the Best Things to Do When You Retire
9 of the Best Things to Do When You Retire

You’ve waited all your life for this moment. Make the most of your retirement.

Medicare Will Not Cover These 6 Medical Costs
Medicare Will Not Cover These 6 Medical Costs

Don’t let these health care expenses catch you off guard in retirement.

Beware This Hidden Ingredient in Rotisserie Chicken
Beware This Hidden Ingredient in Rotisserie Chicken

Something foul may lurk in those delicious, ready-to-eat birds.

7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

Never Buy These 10 Things on Amazon
Never Buy These 10 Things on Amazon

Just because you can purchase something on Amazon doesn’t mean that you should.

3 Colors That Can Ruin Your Car’s Resale Value
3 Colors That Can Ruin Your Car’s Resale Value

Select the wrong color for your next car, and it could depreciate twice as fast as others.

9 Groups Who Should Brace for Higher Income Taxes
9 Groups Who Should Brace for Higher Income Taxes

Recent proposals would hike taxes for people with a wide range of incomes.

7 Big Purchases You Should Never Make
7 Big Purchases You Should Never Make

Sometimes a big-ticket purchase is nothing more than a big waste of money.

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

8 of the Worst Things to Buy at Target
8 of the Worst Things to Buy at Target

No store can specialize in everything. For some purchases, it’s smart to shop elsewhere.

5 States With the Worst Health Care for Retirees
5 States With the Worst Health Care for Retirees

All of these states are located in the same region of the nation.

How to Buy Gas At Costco Without a Membership
How to Buy Gas At Costco Without a Membership

The warehouse club often has some of the cheapest gas in town. Here’s how you can get it as a nonmember.

8 Things You Should Be Buying at Thrift Stores
8 Things You Should Be Buying at Thrift Stores

For one expert, these secondhand bargains stand out from the rest.

20 Great Part-Time Jobs for Retirees
20 Great Part-Time Jobs for Retirees

Retirees can dial back the intensity of work while continuing to bring in a paycheck.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

11 Foods That Can Keep for Years
11 Foods That Can Keep for Years

These are some of the longest-lasting groceries you can buy.

8 Types of Companies That Check Your Credit Report
8 Types of Companies That Check Your Credit Report

Federal law lets these entities peek at your credit — regardless of whether you’re borrowing money.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.