Living Paycheck To Paycheck

Living Paycheck to Paycheck: How To Break The Cycle 2021

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Living Paycheck to Paycheck

What Does Living Paycheck to Paycheck Mean?

What is living paycheck to paycheck? The living paycheck to paycheck meaning is that your bills and expenses use up all of your income, leaving no money left over. When you are stuck in a situation where you are trapped in this cycle it can seem like there is no end in sight, but if you are tired of this life there are steps you can take to improve your financial situation. 

How to Avoid Living Paycheck to Paycheck

If you are currently asking yourself, “Why am I living paycheck to paycheck?”, then you need to start with making a budget. Creating and sticking to a budget can help you make the most out of your income by identifying areas where cutting back on spending is possible. Many people live without budgeting their income which leads to the habit of living for each pay cycle. 

Habits of People Who Are Never Broke 

Here are some habits of people who are never broke that you can adapt into your life to improve your financial wellness and stop living for each pay cycle. 

1. Create a Budget 

Create a budget for yourself so you can see how much money you make and how much of it you are spending in different categories. The priority of your budget should be the essentials: debt, food, housing, transportation, and utilities. After you take care of the most important bills you can look at the money left over to determine whether you can save it, invest it, or if there are other expenses that need to be paid. 

2. Eliminate Debt 

If you are currently living with debt and living from paycheck to paycheck then your first steps towards financial wellness need to prioritize eliminating debt. One method for approaching debt is the debt “snowball” method created by Dave Ramsey. In this method, you pay off the lesser debts first and work your way up to paying off the biggest debts. By starting with small debts you can build up momentum without overwhelming yourself with how much you have left to pay to get out of debt. 

3. Live Frugally 

Anyone who is living paycheck to paycheck should be trying to live as frugally as possible so that they can have extra money to save for future emergencies. You can eliminate unnecessary spending on things like takeout food and paying for streaming services and use the money to save or invest. Being frugal means making every dollar count, including using coupons and looking for deals on the things you have to spend money on. 

4. Get a Side Hustle 

For some people, the only way to stop living paycheck to paycheck is to create another source of income for yourself. If your current job is not paying you a livable wage and a raise is not on the table you could try asking for extra hours/overtime. A lot of people now drive for Uber/Lyft or deliver for Amazon/DoorDash, etc. 

Getting a second job or starting a business of your own to generate another source of income will naturally do a lot to improve your financial situation. If you have such a busy schedule that you can’t imagine how you could fit in another job, consider the ways you can generate passive income from online businesses and how easy it is to now work from home. 

5. Financial Education 

If you seriously want to stop living paycheck to paycheck then you need to educate yourself on budgeting and investment. There are lots of “how to stop living paycheck to paycheck” books that are available at your local bookstore and online as audiobooks. There are also free resources online that you can take advantage of.

How to Save When Living Paycheck to Paycheck

If you are living paycheck to paycheck then you do not have any money left over from each pay cycle, so how to save living paycheck to paycheck is a tough question. There is living paycheck to paycheck stories from people who were able to save and improve their financial situation to stop living paycheck to paycheck and listening to their stories can help you do the same for yourself. 

To save when living paycheck to paycheck you are going to need to live below your means or you need to generate more income. Those are the only ways that you are going to be able to have any money left over. Making a budget is incredibly important for identifying the areas where spending can be cut back. 

There are ways to live below your means without completely depriving yourself. For example, you can still buy the same kind of food items, but if you are frugal with your shopping then you can use coupons and promotional deals to cut back on the price. Some cards and programs even give you cashback for shopping. There are many ways to live below your means with frugal living practices. 

One method that people stand by is that you should always pay yourself first (unless you have debt). This means that before you start chipping away at your paycheck for bills and expenses, put a designated amount in your savings or investment accounts. You can do a lot for your financial wellness when you start paying yourself first before you pay everyone else. 

Statistics 

Living Paycheck to Paycheck Statistics 2018
Living Paycheck to Paycheck Statistics 2019
Living Paycheck to Paycheck Statistics 2020
78% of adults live paycheck to paycheck.  1 in 4 workers do not save monthly. 

Source: Forbes 
59% of adults live paycheck to paycheck.  Only 38% of families have an emergency fund. 

Source: Investopedia 
49% of adults live paycheck to paycheck.  53% of families do not have an emergency fund. 

Source: BizJournals

The statistics show that if you are currently living paycheck to paycheck then you are not alone. Shockingly, one study in 2018 by Forbes discovered that one in ten workers who makes six figures a year lives paycheck to paycheck. This goes to show that you can end up living in this cycle no matter what your salary is if you do not live below your means and create a budget for yourself. 

Summary

Creating a budget and having a good look at where your money is going each month is the first step in breaking the cycle. We’ve created a free monthly budget sheet that you can print out and use to find areas of your spending that you can either cut back on or stop spending money on altogether.

Getting rid of your debt is another important step in your quest for financial freedom. Once your debt is paid off you will have more money to put into an emergency savings account or to invest for your future.

Starting a side gig to make extra money each month or starting your own business is a great way to achieve financial stability. If you have extra money coming in it takes the pressure off you physically and mentally, and you find yourself slowly getting ahead.

Once you have paid off your debt, stopped spending money on the things you don’t need, and started your side hustle to earn extra income each month, it’s time to start looking into how you can start growing your money by investing.

There are more online investing options than ever for beginner investors, and the great news is that you don’t need a lot of money to get started. There are apps that you can create a free account with and start investing with as little as $10. Some of them even offer you free stocks to get started!

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