8 Tactics to Stop Living Paycheck to Paycheck

While escaping the cycle of living paycheck-to-paycheck isn’t easy, it’s possible to get ahead by changing your mindset, examining your lifestyle, and creating new habits. Once you free up even a small amount of discretionary income each month, it’s possible to build a better financial life with more security and less stress.

Laura Adams, MBA
7-minute read
Episode #550

5. Reduce the cost of debt.

Many people are drowning in expensive debt that keeps them locked in the paycheck-to-paycheck habit. Can you refinance your mortgage for a lower interest rate or sell your home and move into a less expensive one?

Shaving the interest off high-rate credit cards and loans can add up to big savings. Consider consolidating debt using a low-rate personal loan so you have more money available every month.

Consider consolidating debt using a low-rate personal loan so you have more money available every month.

You can download the free Online Loan Comparison Chart PDF to compare the pros and cons of popular lending options. Shifting debt to a lower-rate product is a wise way to save interest and pay off debt faster.

6. Automate saving (even small amounts).

No matter your financial goals, automation is the trick to making saving easy. For instance, if you’re looking forward to a comfortable retirement, set up monthly recurring contributions to an Individual Retirement Arrangement or IRA.

If you have a workplace account, such as a 401k or 403b, they offer built-in automation because contributions can only come from your paycheck.

If you want to save for an emergency fund or an upcoming vacation, set up a recurring transfer to a safe, FDIC-insured bank savings account. If you want to save for a child’s education, consider a 529 college savings plan. Moving money into a dedicated savings account, before you have a chance to spend it, makes it more likely that you’ll meet your goals.

Keep increasing the percentage of your paycheck that you save on a regular basis. For instance, if you’re contributing 3% to a retirement plan, bump it up to 4% next year.

7. Create more ways to make money.

Cutting unnecessary expenses is great for breaking the paycheck-to-paycheck cycle, but earning more can be the ticket to turning your financial life around. You could:

  • Get a second job
  • Pick up extra hours at work
  • Ask for a raise
  • Seek a promotion
  • Start a side hustle

There are many ways to create more income streams, such as driving for Lyft or Uber, taking surveys on Survey Junkie, house sitting, dog walking, tutoring, delivering groceries for Instacart, or writing. Try something new. You likely have skills that can be used in a variety of jobs and types of work.

8. Focus on the future lifestyle you want

If you’re like me you want security and financial freedom, which are impossible to get when you’re trapped living paycheck-to-paycheck. Instead of hoping that next month will be different from this month, focus on the future you want to create.

Nothing worthwhile is easy to achieve. So, decide today how you want your life to be in 5, 10, or 20 years from now. The moment you create a plan and begin taking small action steps, you’ll feel much less stress and instability.

Get More Money Girl!

To connect on social media, you’ll find Money Girl on FacebookTwitter, and Google+. Also, if you’re not already subscribed to the Money Girl podcast on Apple Podcasts or the Stitcher app, both are free and make sure that you’ll get each new weekly episode as soon as it’s published on the web. The show is also on the Spotify mobile appClick here to sign up for the free Money Girl Newsletter!

Empty Wallet image © Shutterstock


About the Author

Laura Adams, MBA

Laura Adams received an MBA from the University of Florida. She's an award-winning personal finance author, speaker, and consumer advocate who is a frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers is her newest title. Laura's previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show.