7 Best Ways to Stop Living Paycheck to Paycheck

middle class dad living paycheck to paycheck money puzzle under magnifying glass

Are you sick to death of living paycheck to paycheck?

Do you have less than $1,000 in the bank and are basically one really bad day away from big financial trouble?

If you’re like most people, you are.  If you’re even more like most folks, you have at least $6,000 in credit card debt and most likely you started late and aren’t saving enough for retirement; the true living paycheck to paycheck definition.

Essentially You’re Broke! (been there, done that)

Living paycheck to paycheck, by definition means that when your check comes in, you’re already out of money from the past check; nothing saved, nothing set aside for emergencies and nothing saved for the long term.  Then that new check comes in and it’s spent in no time flat too. Repeat.

Are you ready to stop living paycheck to paycheck?


middle class dad living paycheck to paycheck dollar bill cut into pieces

Now that wasn’t meant to scare or shame anyone; I’ve been in all those boats.

I am, however, trying to spur you into action and my hope is that by reading this post you’ll begin to put more thought, but more importantly ACTION into your financial planning.

We may be living paycheck to paycheck now, but that’s not where we want to be in 3, 5 or especially 10 years down the road.

So check out my tips on how you can stop living paycheck to paycheck. I’d love to hear back about your progress and answer any questions along the way

You don’t have to be a CPA or a CFO or even a stock broker to do some decent long and short term financial planning.  In fact, “financial planning” is probably too fancy a word for what I’m talking about.

I just want you to be intentional and aware of both where your hard earned dollars are going each month and what are some strategies you could easily and quickly implement to take that to the next level.

If you struggle living paycheck to paycheck and are looking for some simple tips to maximize your hard earned dollars, I highly recommend you check out my post 3 Key Steps to Larger Paychecks Tomorrow – Make Every Dollar Count!  After all, in order to stop living paycheck to paycheck we first need to maximize the income we generate!

middle class dad living paycheck to paycheck guy with pocket change
How can I save money if I live paycheck to paycheck?

In order to stop living paycheck to paycheck we first need to:

  1. Identify the problem
  2. Figure out how we got there
  3. Figure out the steps needed to solve the problem
  4. Identify the habits or circumstances we need to change to not repeat the problem

Let’s look at some basic statistics on living paycheck to paycheck (as so many of us do)

Statistics in infographic courtesy of CreditDonkey and Motley Fool (two different posts) and FRED.

middle class dad living paycheck to paycheck debt and savings inforgraphic

The terrible truth behind WHY you are living paycheck to paycheck

  • You Don’t Have a Roadmap – You can’t get anywhere if you don’t know the way, and just like a map or GPS system tells you where to go when driving, a monthly household budget is your way of telling your money where to go each month.  Without a budget, you just spend until it’s gone and the ride out the days until the next paycheck and hope nothing bad happens in the interim
  • You Spend More than You Make – Unless you’re in Congress this just doesn’t work.  You’ll never get ahead or even stay afloat if you are outspending your income. Paycheck to paycheck should not be a lifetime goal.
  • You Have an Income Problem – It could be you budget each month, have your priorities straight and your spending is in line but you still can’t catch your breath.  In those cases, it may be worth looking at your income and career path and especially looking at the long term.  According to the Department of Numbers, the median household income in the US is currently just under $58,000.  Of course if you live in California or New York, the median there is probably higher, but if you make a lot less than $58,000 then it’s time to examine career choices.

All of these may not apply to you, but if you struggle to make ends meet, living paycheck to paycheck or just can’t seem to get ahead or catch a break, chances are at least one of these does apply.
Fear not though!  This post is not to make anyone feel bad about their situation.  I’ve been in your shoes and I simply see the benefits of looking at things differently and want to help you do the same.

Harness the power of budgeting to stop living paycheck to paycheck!

A budget is simply a document, spreadsheet or even piece of paper that you and your spouse write out and agree to before the month begins.  You note all the projected income at the top (ie: your paychecks) and all the projected spending below that.

You know what your expenses are:

    • Rent or Mortgage
    • Electric, gas and water
    • Gas for your cars
    • Internet & Cable TV
    • Cell phone bills
    • Insurance (life, auto and maybe renters)
    • Groceries
    • 401k or retirement
    • Credit cards or bank loans
    • Car loans

Start by projecting what all of those will cost (based on previous month’s history) and subtract that from your income.

Then see what’s left over.  We haven’t yet touched on general savings, rainy day funds or kid’s college and those are all necessities too, but until we get back on track it will be best to press pause on those things.

I have a copy of my Budgeting Spreadsheet available at no charge
– a key step in not living paycheck to paycheck!

It’s a simple, highly customizable, Excel spreadsheet and you can download it quickly and easily FOR FREE!
middle class dad living paycheck to paycheck free budget banner optin
If you get started on a budget, you’ll also want to head on over to my post 5 Essential Bank Accounts You Need For Your Family.  This post details exactly why you need 5 different bank accounts and the roles they play in helping you move past living paycheck to paycheck.

How much do you save from your paycheck?

Everyone’s monthly expenses and income are a little different. That being said the infographic below is “generally” what I recommend in terms of how to divide up your paycheck.

Obviously some slight variations will work just fine. In my experience though, if you have any significant differences in your budget, you may have a hard time NOT living paycheck to paycheck.

middle class dad living paycheck to paycheck how to divide up your paycheck infographic

What is the 50 30 20?

Essentially this is a style of budgeting that says you spend 50% of your income on needs, 30% on wants and 20% on savings.

I personally find that system too simplistic but if it gets you budgeting than that’s better than not starting! My biggest issue is that in certain circumstances (such as low income or heavy debt) I don’t think you should be focused on savings at all. And 30% of your income going towards so-called wants is probably too high until you’re out of debt and living more within your means.

How can you can stop living paycheck to paycheck?

First we need to trim our household budget.

I recommend putting your monthly expenses in order from most to least important.  They are all important and it’s important from an integrity standpoint that we repay our debts, but when times are tight, some payments may get delayed or put on the back burner so it’s important to prioritize those!


  1. Rent or Mortgage – Your problems get a whole lot worse if you have an eviction or foreclosure to deal with
  2. Utilities – No lights or water is bad for everyone
  3. Food – You and your kids have to eat.  You don’t have to eat fancy or eat out, but don’t let your kids go without
  4. Gas for cars – You can’t get to work or look for work without reliable transportation so keep at least 1 car gassed and in good working order


  1. Internet– You can probably make due with your smart phone and/or a computer at work
  2. Credit Card payments – Make the bare minimum payments until your budget gets in the black.  Even if you can’t afford their stated minimum payment, send them something each month ($25) and they can’t report you as unpaid or paid late.  In dire straights though, these guys would be bottom rung on the ladder.


  1. Cable TV – Get a Roku box for less than $50 and Netflix or Hulu for $10/month and save a bundle
  2. Eating Out – Eating at home and cooking from scratch is just cheaper (and often healthier).  Until the budget, income and spending is under control, no eating out
  3. Fancy Cars – If the total value on your cars exceeds half your annual gross household income you simply have too much invested in cars and need to sell one (or both).  For example, a couple making $40,000/year should not own more than $20,000 total in vehicles combined.  Still have car payments or maybe underwater on your car’s value?  A low interest loan from your local credit union is preferable to a $400/month car payment when you can’t keep the lights on.

Income boost to stop living Paycheck to Paycheck!

middle class dad living paycheck to paycheck inbox dollars ad

As I mentioned above, if your household gross income is well below $58,000/year, you may want to look at your or your spouse’s career track and do some long term planning.  Now there could be reasons it’s low and those could be reasons to justify it.  Reasons like:

  1. You and your spouse decided one of you would stay home and raise the kids – A stay at home Mom or Dad is a great thing for your kids and a noble cause and if you can make it work budget-wise; go for it!
  2. One of you is going back to school to earn a degree that will significant increase their earning potential – Any investment now that pays off significantly later is a good reason to pinch pennies and ride out the storm.  Just make sure you’re on a balanced budget and that the long term earning potential is really there.

But, if you don’t have kids both partners should be working full time (40 hours/week) and even with kids, one partner should be full time and the other could earn some part-time income unless you’ve opted for point #1 above.

Once you start to get traction, you’ll be ready for some additional tips and insight, so I highly recommend checking out my post about the 51 Ways to Earn Extra Cash.

Those can help you take your family’s earnings to the next level!

If you do need to make an income or career overhaul we need to consider 2 things:

      1. What can you do NOW to boost income?
        • Delivery pizzas at night = $1,000/month
        • Mow/rake lawns on the weekend
        • Sell stuff on Ebay/Craigslist
      2. What can you do career-wise to boost your income in 3 years or fewer?
        • Finish a degree or achieve a certification?
        • Move to a more competitive city?
        • Work more hours or find a new employer?
        • Change fields?

The worst habits to break to stop living Paycheck to Paycheck

So we know the issues, we’re working on solutions, but if we don’t address the fundamental behaviors that created the problems, there’s a VERY good chance we’ll get back in the same situation down the road.

We need to change our habits if we are to change our paycheck!

If you struggle with goal setting and (more importantly) sticking to your goals, check out on of my most popular posts about How to Keep Your Goals.  While it’s geared towards New Year’s Resolutions, it can apply to any goal; any time!

middle class dad living paycheck to paycheck will durant quote

So what are the habits we need to change to stop living paycheck to paycheck?

Without knowing the specifics of anyone else’s situation, I can tell you what habits I needed to change when I was in this boat:

  1. I needed to live on a written budget each month (that my wife and I agreed to and worked on before the month began)
  2. We pay cash for things like food, groceries, gas and spending money instead of using a debit card; when we’re out, we’re out!
  3. We cut out unnecessary expenses like cable and cut back lifestyle in general (hello Taco Cabana, goodbye 5 star restaurants!)
  4. We knew we needed to live on less than we made, (so that meant getting out of debt, cutting up the credit cards and not looking back).

I mentioned above things like rainy day emergency funds, retirement and saving for kid’s college but if you’re currently in this boat, those are long term goals and not something to focus on right now.

In fact if you are contributing to a 401k or other retirement plan, it’s my belief that you should only be contributing to those ONCE you are out of debt and not barely able to make ends meet.  So when I was in your shoes, I temporarily stopped contributing to those.

Between a solid financial plan, cutting expenses and possibly boosting income, you can stop living paycheck to paycheck.

But you’re not there yet and a nice sized 401k won’t help you if you’re facing foreclosure or bankruptcy. And while you could cash it out, between the likely 25% tax rate and 10% penalty, that’s like borrowing money at 35% interest


You WILL get there (I know because we did it); you just need to be focused and intentional with your time, money and actions.  You’ll need to curb impulses and not worry about how nice your neighbor’s car is; focus on your family’s future!

Want an easy and cheap way to cut your bills?

I just signed up with BillXpertz. They negotiate with the bill companies of your choice. If they can lower your payments, they take a small percentage of the savings. If they can’t reduce your bills, it costs you nothing.

In my case they cut my monthly phone bill by $30 bucks a month and all that cost me was a one-time payment of $13 bucks!’

Talk about easy money! Check out BillXperts and see if they can’t save you money too. Some folks have saved thousands!

Did I cover everything you wanted to know about how to stop living paycheck to paycheck?

I’d love to hear from you about your journey or struggles; especially what tools you used or would like to see that would help in this journey.

If you like this post, please consider sharing on Facebook, because if it helped you, it just might help someone else!

middle class dad living paycheck to paycheck facebook share button


Photo credits (that aren’t mine or which require attribution):
New Dollar Bill (in infographic) – by Dave Wineris licensed under CC BY 2.0
Money Jigsaw (in infographic) – by Images Moneyis licensed under CC BY 2.0
Torn & Cut One Dollar Note (in infographic) – by Caledonian Global Financial Servicesis licensed under CC BY 2.0
istock_000012335294small (pocket change) (in infographic) – by Caledonian Global Financial Servicesis licensed under CC BY 2.0
Of course I have to add in that this post, like all my personal finance posts, is not intended as “financial advice”. I offer my opinions based on my experience, research and my own mistakes. Thus if you need financial advice you should seek out a professional in that area who is legally authorized to give financial advice.

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