4 Tips to Break the Paycheck-to-Paycheck Cycle in 2024

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Living without emergency savings is the worst. Read on for real tried-and-true tips to improve your cash flow situation in the new year. 

The data on Americans’ personal finances is depressing. According to SecureSave, 63% of American workers couldn’t cover a $500 bill out of their savings. Living without emergency savings is no fun at all (to put it mildly), and if you need some help breaking out of this lifestyle, I’ve got some tips for you.

No great thing is achieved without effort, and I understand that some of these moves may be out of reach for some readers. But even employing just one or two of them can help your emergency fund grow this year.

1. Decrease regular expenses painlessly

No, this is not where I tell you that your days of coffee shop lattes and unbridled joy are over. Cutting all the fun spending out of your life is a great way to feel miserable and end up giving up on trying to save more. So don’t do that!

Instead, see what everyday expenses you can lower to free up more cash in your budget. Shop around for a new car insurance policy. Speaking of your car, could you swap a new car for a used one with lower payments? Internet service providers charge an arm and a leg these days — if you have multiple options in your city, see what kind of deal you can get to save money every month.

It’s also worth auditing some of your non-essential expenses. Got an expensive gym membership? Why not walk or jog around your neighborhood and supplement with a one-time cost for a cool piece of home gym equipment? If you’ve got a Netflix subscription you barely use, consider canceling it.

2. Increase your income

This is far and away the most effective means I have found for getting out of that paycheck-to-paycheck life. If you’re currently in a good job that is working for you, but perhaps doesn’t pay as much as you’d like (what job ever does?), approach your boss to discuss the possibility of a raise if it’s been a while.

You may not succeed at appreciably improving your salary this way; it’s often easier to get paid more if you change jobs (or even careers). A career change is rarely easy — I went through it myself in 2021, and it took submitting over 400 job applications to get hired for my first role in my new career. And then I became a full-time freelancer in 2023. This was a drastic move to be sure, but I think it was worth it.

If you’re ready to get out there and job hunt, you should know the job market slowed down ever so slightly heading into Christmas, but unemployment is still at historically low levels. This means that as we start off the new year, it’s a good time to polish your resume and LinkedIn profile and put yourself out there. Extra income can improve your life in so many ways, and finally earning enough to save money for unplanned bills (and future financial goals) feels amazing.

3. Pay down debt

If you’re carrying a lot of high-interest debt, it’s likely eating up more of your income than you’d like. Getting out from under it is a good move that can improve your financial well-being and help your paycheck stretch further. Increasing my income was how I managed to pay off all my debt in 2022, along with using the debt snowball method, but there are lots of options.

A balance transfer credit card can give you a break from interest, often for a year or more. A debt consolidation loan gives you a fixed interest rate and a set payoff timeline. Whatever you choose, be sure to make a plan and know that paying off debt can give you more financial breathing room.

4. Try automation — and pay yourself first

If you have managed to free up money to save, you might face another problem. Getting good at saving money involves habit-building, and a lot of people struggle with this. Automating your savings contributions can help a great deal, though. Decide how much you want to save every week or month, and set up an automatic transfer from your checking account to your savings account. This way, you don’t have to remember to move the money.

Another tip that really helped me? I paid myself first. When I get paid by any of my clients, I immediately take out Uncle Sam’s cut (freelancers pay quarterly estimated taxes, so I must always plan for this). Then I decide how much I want to save, and send money to my high-yield savings account. I treat tax payments and savings contributions as must-pay bills, and saving is never an afterthought. I saved a solid chunk of money to buy a house later this year by using this technique, lest you doubt its efficacy.

2024 could be the year you finally bust out of the paycheck-to-paycheck cycle, and these tips can help. Good luck to you — money in the bank to cover unplanned expenses is worth striving for.

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