4 Things to Do Right Now if You’re Living Paycheck to Paycheck

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If you’re living without any savings, track spending, find a fixed expense to cut, and aim to increase your income. Learn more about your options here. 

Living paycheck to paycheck is the norm for many people across America. A good 60% of Americans indicated they were living paycheck to paycheck at the start of this year. If you’re one of them, you probably already know this means you empty your checking account between paydays and are left waiting until your next check arrives to cover upcoming bills.

If this is your reality, it’s undoubtedly stressful. After all, any surprise costs could make it impossible to make your funds stretch further until the next time you get paid since there’s no wiggle room in your budget. And that could mean you get stuck in credit card debt.

Escaping this situation may feel daunting if your pay simply isn’t enough to afford basic necessities. But the good news is there are steps almost anyone can take to try to improve their financial situation and break the paycheck-to-paycheck cycle. Here’s what those steps are.

1. Track your spending

Keeping track of your monthly spending can be one of the best ways to stop living paycheck to paycheck.

See, some people don’t realize where their money is going — or how much is wasted on stuff that isn’t adding a lot of value. By writing down every purchase, you can spot patterns and problems in your spending that you can change so you have more money left over by payday.

There are budgeting apps that track your spending, but manually doing this and entering it into a spreadsheet often works better as it forces you to acknowledge where your money is going in a way that just looking at numbers on a screen won’t necessarily do.

Once you’ve kept track of your spending for about 30 days, see what you can cut. Since you’ll know where you’re starting from, you’ll be able to be more realistic. If you’re spending $1,000 on groceries a month, for example, you probably can’t cut that to only $250. But you could discover that a lot of this money is going to buying meat products, and switching to a few plant-based meals weekly could make a noticeable impact.

2. Look for ways to reduce a fixed expense

Another helpful way to break the paycheck-to-paycheck cycle is to reduce a fixed expense. If you do this once, it will free up the money indefinitely that you used to spend on that expense.

Say, for example, you sell your expensive new car with the $500 a month car payment and get a cheaper used one that comes with a monthly payment of $250. Going forward, you’ll have an extra $250 a month to add to your savings.

3. Explore opportunities for increasing income

Increasing income can be another great way to stop living paycheck to paycheck. If you have more money coming in but you don’t increase your spending, you can keep that extra money as a financial cushion or pay down credit card debt.

Doing a side job for a few hours a month is one option to increase income. You could also talk to your boss about opportunities for overtime or advancement. Or you may even want to consider looking for a new job if you don’t think you’re being paid a competitive wage.

4. See if you’re entitled to any benefits

If you are living paycheck to paycheck because you aren’t being paid a living wage, the steps above can still help you — but they may not be enough. In your situation, it’s worth looking into what kinds of benefits may be available to you.

You may qualify for programs to help you lower housing costs, pay less for food, or reduce medical insurance costs. Checking Benefits.gov is a good place to start to see what kinds of government assistance may be out there.

If you qualify for assistance, don’t hesitate to take advantage of it. That’s what it’s there for, and the extra help could give you the breathing room you need to start saving an emergency fund and improving your personal finances over the long haul.

Ultimately, the only way to stop living paycheck to paycheck is to bring in more money or cut expenses. Give these four steps a try today to see if you can make that happen.

If you manage to make more or reduce your spending, check out the best high-yield savings accounts so you can open an account and start building an emergency fund that will break the paycheck-to-paycheck cycle for good.

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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. Christy Bieber has no position in any of the stocks mentioned. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.

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