How to Stop Living Paycheck to Paycheck in 2021 and Beyond

Do you struggle to make ends meet? Does time between paydays seem to stretch endlessly? Approximately 63% of Americans will answer “Yes”. Are you ready to change that? In this economic climate, more of us are struggling to pay the bills, buy groceries and fill up our gas tanks. Paying off the mortgage, putting the kids through college without financial aid and amassing $1 million for retirement seem out of the question now. Just having cash left over at the end of the month would be nice.

Are you willing to say, “I’m tired of living paycheck to paycheck!” and take action? Of course, you are – you found this article, didn’t you? Read on to learn how to stop living paycheck to paycheck in 2021 and beyond.

Ways to Stop Living Paycheck-to-Paycheck

1. The First Thing to Do is Track Your Spending

The first most important thing you can do is get a clear picture of what you spend, and compare it to what you earn. Take a 2- or 4-week period to track everything you spend, whether it is cash, or credit, or check, or debit. There are two basic ways to handle your money to get out of debt, which should be a goal for anyone living paycheck-to-paycheck, because the interest on debt grows faster than on savings: make more money, or spend less than you earn.

2. Identify The Problem

You already know that you’re living paycheck to paycheck, but you might not know why. The first step to breaking the cycle is figuring out why. For many people, it’s an income problem. There just isn’t enough money, which can make it more challenging to stop living this way. But for others, it’s because they have too many expenses. You’re spending too much, leaving little leftover for necessities and emergencies.

Even if you’re confident that you know the reason behind the problem, take a few minutes to analyze your income and expenses. The key here is to clearly identify why you’re living paycheck to paycheck so you know specifically what to tackle to change it.

3. Reduce Expenses Where Possible

What are your top expenses? Housing, taxes, food, transportation, childcare, and utilities (especially if you include cell phones, internet & cable) are usually way up there. How could you reduce each of those? What are you spending on but not really enjoying or using? What could you get for less?

Keep in mind that cutting a big expense will give you the most mileage. Could you move to a less expensive home or area? Rent out a room in your home? Do you have a car you could sell? Could you keep your existing car once you’re done paying it off instead of buying a new one?

4. Stop Using Credit Cards

A cornerstone of living from one paycheck to the next is filling the gaps with credit cards. Countless people who survive paychecks will turn to their credit card to purchase everything from the mundane to life’s emergencies, not realizing or caring about the interest they’re also paying on that purchase.

The bill gets covered and they survived another month, the thinking goes. But a bunch of little charges on a credit card can add up—that pack of gum just got a lot more expensive if you factor in the interest you’re paying as a result of using a credit card.

A better option—one that will not only reduce the debt but will force you to live within your means—is to forego using your credit card altogether. In order to reduce your debt and thus free up more money that can be saved, you have to stop spending and credit cards can be a tantalizing way to impulse buy.

You also have to refrain from putting monthly bills on your credit card unless you’re in a position to pay the entire balance each month.

Start saving now!

The next most important step you can take, in the beginning, is to start a small savings account if you haven’t already. Begin depositing into it regularly, at least $100 per paycheck but more if you can. If you can’t find $100 then see the next step for how. Make it an automatic deposit, the first bill you pay each payday, because it is the most important!

A savings account will help you smooth out your finances — when an emergency comes up, like your car breaking down or someone having to go to the hospital, you won’t be thrown back into debt. You will have some cash to pay for that emergency, and you can use your regular paycheck for regular expenses.

Start Thinking About Your Goals, and Planning For Them.

When do you want to retire? How often do you want to travel? When do you want to buy that dream house? Do you want to save for your kids’ college education? Think about what you want in life, and start planning to save for them, especially once you’ve done all the above.

Once you’ve gotten beyond these steps, you should be past the paycheck-to-paycheck syndrome. Now there’s a whole world of personal finance options available to you, including investing your money for your goals. But getting past these first stages is important.