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The dread. The agony. The wondering when will this ever quit. Can I just catch up and take a breath?
Living paycheck to paycheck is tough.
You are wondering why you are still living paycheck to paycheck…
There is no way to paint it beautiful; it is hard. This is your current reality.
But, living paycheck to paycheck doesn’t have to be your reality. You can and will break the cycle.
This ultimate guide will teach you! Learn the warning signs, how to stop living paycheck to paycheck. Plus hear other success stories. It just takes a little perseverance, a little dedication, and some resilience to make it happen.
You are not alone. Did you know nearly 4 out of 5 U.S. workers claim to be living paycheck to paycheck? This is an epidemic.
If that is you and you are tired of living paycheck to paycheck, then we are going to learn how to break the cycle for good. You are in the right place at the right time. Are you ready?
Today, one person at a time, we are going to put a stop to this living paycheck to paycheck cycle and start enjoying money and life.
In order to overcome living paycheck to paycheck, you must build a strong foundation with money. Period. What does that mean exactly? It means you prioritize the practice to save money first.
There is no way to sugar coat it. Money in the bank will always be there to pull you out of a tough situation.
Right now, you are going to learn exactly how to stop living paycheck to paycheck. Then, in a couple of months, you will break the living paycheck to paycheck cycle.
Are you up for the challenge? I know you are because enough is enough. The stress just isn’t worth it anymore.
Time to stop living paycheck to paycheck!
Let’s learn now to do it…
What is Considered Living Paycheck to Paycheck?
Living paycheck to paycheck means you are constantly worried about how and when you are able to pay the next bill. Maybe you are able to cover all of your expenses, but there is never money left.
Simply put… When you are living paycheck to paycheck, your current income from the latest paycheck covers your month’s expenses. There is no rainy day savings or money to pay expenses if needed.
You are surviving by counting on that next paycheck to get you by.
The downfall of living paycheck to paycheck is when that paycheck stops for whatever reason, you are left scrambling on how to cover your bills.
You are not ahead at all.
Once you can cover your expenses for a number of months, then you have broken the paycheck to paycheck cycle.
How do you change this cycle? Don’t worry… we will cover that shortly.
Signs You are Living Paycheck to Paycheck
The warning signs might not seem like flashing lights to you. But, it may to the people around you. You are in the thick of things and don’t see the issues snowballing into a much bigger signs.
Learning the signs whether you are living paycheck to paycheck is critical!
If you continue willingly living paycheck to paycheck, then financial freedom won’t happen. (I don’t want like to be blunt, but it is the truth.) The light at the end of the tunnel is you can learn how to stop living paycheck to paycheck and eventually become financial independent.
Ignoring the warning signs means you are constantly worry about how to make ends meet.
Here are the warning signs you need to watch out for:
1. Constantly Stressed about Money
Everything relating to money causes you stress. This isn’t good for your pocketbook, but it is detrimental to your health.
You are stressed about having enough money to pay rent, make your debt payments, feed the family, and most importantly, that there will be enough money at the end of the month.
The stress isn’t going to make your personal finance situation any better.
Worrying about when you are going to run out of money is just that worry. It takes action to overcome and stop living paycheck to paycheck. Stop worrying and start taking action.
2. Laugh It Off
To make light of any situation, you laugh about your personal finances.
You find it funny to become the brunt of the joke instead of dealing with the true problem.
This won’t help anything. While it is better than constantly worrying and causing stress, you are brushing aside the true issue at hand.
Stop laughing about your money situation and start making progress to stop living paycheck to paycheck.
3. Payday Loans
Oh, my! Run away from payday loans and cash advances. This is the absolute worst cycle if you want to learn how to stop living paycheck to paycheck.
You will constantly be robbing Peter to pay Paul. There will not be any progress made.
The form of debt is a very slippery slope and one of the most difficult to climb your way out of due to high interest rates and fees.
Don’t get involved with cash advances or payday loans. Resist the urge and look for help in any other way.
4. Asking Friends and Family for Help
If you need to rely on others, then you haven’t built a solid foundation with money.
You must learn to take care of your own needs first and foremost.
This money well will dry up and when it does, you may have lost many friends and have grumpy family members to contend with.
Stop reaching out to friends and family to cover your expenses. It is time to make a plan to stop living paycheck to paycheck.
An emergency fund is critical to avoid asking for help.
5. Hiding your Reality
You don’t want to let anyone know that you are struggling. I get it. Asking for help for some is the hardest thing to do.
However, shouldering this heavy burden on your own makes the whole situation worse.
If you are using credit cards to keep you afloat, then it is time to cut them off and stop the excessive money bleeding. Yes, it will be painful, but in the end, it is better than racking up more credit card debt.
The stress of the whole situation has become more than you can bear.
Reach out to someone who trust and tell them the money reality you are living in. Pick someone who can help keep you accountable in order to transition away from living paycheck to paycheck.
- Emergency Fund – Everything You Need to Know
- How to Budget Money and Still Enjoy Life
- 175+ Simple and Easy Frugal Living Tips to Save Money in 2019
- How to Make Living on a Budget Painless
How to Stop Living Paycheck to Paycheck
These are the exact steps to take. Each step is of utmost importance to break the paycheck to paycheck cycle.
Don’t skip on of the steps because you need all of them to become successful. Believe me! Changes won’t happen overnight, so don’t get discouraged. You are tired of living paycheck to paycheck, so there is no better time to change than now!
It will take a minimum of three pay cycles to begin to see changes. During that time you will begin to save money to stop the paycheck to paycheck cycle.
Here is the main point… you must take action to change your money situation. Sitting idly by and hoping things change just won’t cut it.
1. Change Your Money Mindset
Your money mindset will determine your money journey.
If you truly believe that you are destined to constantly be living paycheck to paycheck. Then, you will will. There is no need to continue reading this post because you aren’t willing to make the changes.
You must be willing to stand up and believe in yourself that you can change your mindset.
Make your first money goal to be stop living paycheck to paycheck.
2. Get Current
The goal is to become current with your spending. Not paying for your past spending. What you are paying for today and this month is for today and this month.
This is why I dislike credit cards because of the 21-25 day delay until the bill is due from the closing date.
For example, it is April and you paid your April mortgage / rent and your March credit card bill. Thus, you are always paying for things in arrears. So, you can’t quickly adjust your spending in order to become current.
You need to spend money in the current paycheck for stuff happening in the current time frame.
This won’t happen overnight. This is the ultimate goal when learning how to stop living paycheck to paycheck. It will take time and all of the following steps will help you get there.
For past due bills… write all of the past due bill out. Figure out which are to be crucial to be paid first. Pay those first. Then, reach out to the others and be honest and upfront about your situation. Tell them how and when you plan to pay their bill.
Until you are current with all of your bills, you must limit all discretionary or fun spending.
Focus on the basic needs to survive – a place to rest your head, food in your belly, and transportation to get to and from your place of work.
It is time to break this cycle of living paycheck to paycheck.
3. Cut the Unnecessary Spending
Next, up is to stop the money bleed. Stop overspending and stop spending in general.
A spending freeze is critical to get ahead with your finances.
This step will help you become current in what you are spending and when. It will put the brakes on spending money now, so you pay last month’s bill and catch up spending to the present time frame.
Also, there are many other benefits to a spending freeze besides just saving money. It teaches you what is important and how you truly desire to spend your money. Not how you just habitually spend money.
You must stop the overspending immediately.
- The Ultimate Guide to a Successful Spending Freeze
- The Vicious Cycle- Learn How to Stop Spending Money Now
- Ultimate Guide to a Successful No Spend Challenge
4. Make a Budget
In order to stop living paycheck to paycheck, you need to know what money is coming in and what money is going out. That boils down to the concept called budgeting.
Budgeting is critical to long-term success with money.
A budget will help you identify areas that are points of weakness for spending money. Also, it will help you to ensure that you are spending less than you make.
It is possible to live below your means.
Learn how to make a budget and make sure it works for your.
- How to Budget Money and Still Enjoy Life
- 9 Surprising Advantages of Budgeting your Money
- The Best Methods of Budgeting You Need to Know
- How to Make Living on a Budget Painless
- Full List of Budgeting Apps on the Market
5. Build Up Emergency Fund
An emergency fund will be the backbone to your financial security.
A baby step in the goal of stopping the living paycheck to paycheck cycle.
Don’t just assume saving for an emergency fund will never stop the current cycle you are in. That is your negative mindset pulling you down.
A minimum of $1,000 in your emergency fund to start.
But, that number may not be sufficient for your income level. Make sure to check out everything you need to know about emergency funds.
6. Rainy Day Fund
The final step to stop living paycheck to paycheck is knowing that you have money in the bank to cover your monthly expenses.
A rainy day fund is the ultimate way to stop the complete cycle of living paycheck to paycheck.
That means you have money saved and set aside to cover your monthly expenses. The incoming paycheck isn’t needed (but definitely wanted) to pay your current month’s expenses.
For example, your monthly expenses are $4000. You need at least $4000 saved to cover one month expenses. Once you have that amount saved, then you are one month away from going back to living paycheck to paycheck.
A great way to help build up your rainy day fund sooner is to divide your paycheck up into two bank accounts. Then, you are setting aside money just for your rainy day fund.
7. Live Within Your Means
Finally, living within your means is key. Even better, live below your means.
That means your spending is less than your income.
This one factor will determine your long-term success with money. By saving money, you open doors for other opportunities.
The greater your saving percentage, the better off you will be. Start small and try to increase how much you save each month.
- How to Live Below Your Means and Love Life
- Why a Thrifty Lifestyle is Something You Need Today
- 10 Money Management Tips in Crisis Times to Help You Stay Afloat
Living Paycheck to Paycheck Stories
Story #1 –
A little personal story from me to you… when I was living paycheck to paycheck, it hit the same time my first student loan debt payments were due. Very quickly I understood that debt is a cash flow killer. There just wasn’t enough money to go around.
I kept hoping the day would come when I would make more money and then things would be easier. However, that day didn’t come as fast as I wanted. So, I need to adjust. I needed to make the changes in my life – specifically my overspending and my lack of savings.
Story #2 –
When we were living paycheck to paycheck, we realized that we were in the hamster wheel of trying to keep up with our friends and family’s lifestyles. It wasn’t about what we wanted. It was about appearances and trying to be “normal.” Some might call it a lifestyle creep. But, it wasn’t the life we wanted to live in constant stress and worry.
Once we realized that debt was holding us back, we sold everything that we could that had a loan and made a plan to pay off credit card debt. Our money situation didn’t change overnight, but the outcome would have been much worse if we kept going down the same path.
Story #3 –
We just couldn’t seem to catch a break. As soon as we would get current with our past due bills, another financial or personal crisis would hit. We suffered many back to back job losses, health crisis, unplanned travel for family emergencies… the list could go on and on. It felt like we were meant to constantly live in paycheck to paycheck mode.
The catalyst for change was making a budget that we both could agree on. We followed the advice of Money Bliss and used the slush money for things we couldn’t agree on. Slowly and surely, we made progress. We paid off a car loan. There was finally enough money at the end of the month. We haven’t made it to where we want to be financially yet, but we are better off now than before.
How Much Do You Need to Not Live Paycheck to Paycheck
This is the important number that you need to know.
Hopefully, you have learned what you monthly expenses are. If not, then check out our budgeting help.
For every month of expenses that you save money in a rainy day fund, that is how many months you are away from going back to living paycheck to paycheck.
For example, your family’s monthly expenses are $5000 a month. Then you could need this amount saved.
- 1 month = $5,000
- 2 months = $10,000
- 3 months = $15,000
- 4 months = $20,000
- 5 months = $25,000
- 6 months = $30,000
- 7 months = $35,000
- 8 months = $40,000
- 9 months = $45,000
- 10 months = $50,000
- 11 months = $55,000
- ONE YEAR = $60,000
Obviously, this example number would vary a lot based on the number of people in your household and cost of living for your area.
Many times, a bare bones budget number is a better place to start than monthly expenses because if you needed to use your rainy day fund than you are likely going to limit extra expenses.
To answer the question of how much do you need to not live paycheck to paycheck depends on your monthly expenses and lifestyle.
Stopping the Living Paycheck to Paycheck Cycle
If you are ready to stop living paycheck to paycheck, you can do it.
It takes action to make it happen. You must make deliberate decisions when spending your money.
This process won’t happen overnight. More than likely, it will take a couple of months up to a year.
The living paycheck to paycheck cycle can be vicious. Life can knock you over in a single hit. You just need to decide how you plan to react.
- Will you stand up and fight to get on track with your money?
- Or will you get pushed down only never to get back on your feet?
Make sure to watch for the warning signs of living paycheck to paycheck.
They can creep back into your life very quickly. Stand on your guard.
Use the steps given to put a stop to living paycheck to paycheck.
- Money Mindset
- Get Current
- Spending freeze
- Emergency fund
- Rainy day fund
The time is now for you to stop living paycheck to paycheck!