How to Stop Living Paycheck to Paycheck

Financial stress can be one of the most exhausting things to deal with for many people. Money problems can affect your relationships, your attitude towards your job, and your overall happiness. Let’s talk about how to ease some of that stress — how to stop living paycheck to paycheck!

Many people live paycheck to paycheck, which doesn’t leave much room for flexibility if something unexpected comes up… and when is life ever predictable?

So how can you stop the cycle?

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The Steps to Stop Living Paycheck to Paycheck

I’ve put together these nine steps you can take to start taking control of your finances and STOP living paycheck to paycheck!

Set Financial Goals

Financial goals are a roadmap that tells you where your money should be going. Set financial goals that are going to set you up to live the future you really want. I have an entire blog post about setting financial goals you can actually achieve.

If you don’t have any goals, you aren’t going to have any motivation to keep track of your money or make changes. Come up with some goals and write them down!

In addition to writing down your goals, you need to start thinking about how you can put systems in place to help you reach those goals. Try to think of one thing you can do every day to move you closer to where you want to be. If you want to stop living paycheck to paycheck, setting goals will get you started with a plan!

Get on A Budget

Budgeting is the ONLY way to gain control over your money. Your money will disappear if you don’t have a plan for where it should go, and you will have no idea what you spent any of it on. Creating a budget will enable you to make sure you are covering all your bills and spending your money in ways that support your goals.

A budget gives a specific written plan on what your money is used for. You’ll know exactly how much money you pay to bills, how much is used to pay debt, and how much you have leftover for spending.

There are so many different ways to start budgeting. There are quite a few apps available like You Need a Budget and EveryDollar. You also can use a spreadsheet or just pen and paper. Check out my full post on how to write your first budget.

Track Your Spending

I was never able to stick to my budget until I started tracking my spending. Track every penny that comes in or goes out of your account. There are a ton of different ways you can do this.

My favorite way to track my spending is by using the monthly calendar in my budget planner. I just write out the expense and amount on the day I spent the money. You can check out my post showing my budget planner setup.

There are also a ton of different apps you can use to track your spending. You Need A Budget and EveryDollar are two great free options. You set up your budget categories and can see the current balance of each account as you spend money. The main goal of tracking your spending is knowing what you’re spending money on and how much you have left, so an app is a convenient way to always have access.

Save for Emergencies

Establishing an emergency fund is so important. So many people are tempted to skip this and go right to paying off debt, but that can cause you to end up worse than you started. Having cash available that you can fall back on when something unexpected happens will keep you from pulling out your credit card — and ending up in more debt.

$1,000 is a good starting point for an emergency fund while you are working on paying off debt. You eventually want to have 3-6 months of expenses saved up. There’s no way to know what can happen, and having money available when you need it can help a stressful situation be a little easier.

Make Savings Automatic

You have probably heard the saying “pay yourself first.” A lot of people hear this and then completely ignore it. Even if you are under a mountain of debt it’s important to have savings for the future.

Set up auto transfers from your checking to a savings account. If you never see the money, you can’t spend it! I would also recommend treating this transfer to savings like a bill. This keeps you from having an unexpected overdraft if there’s ever a delay in the transfer.

How much you should be saving depends on what your current financial goals are. If you are working on paying off debt, I would recommend just focusing on saving up an emergency fund and sinking funds for expected expenses. If you are debt-free or saving for a big purchase you can adjust your savings based on what you’re saving for.

Stop Using Your Credit Cards

If you depend on a credit card — or several — to get you through the month, then you are living beyond your means. You have to stop using your credit cards or your finances won’t improve.

This can be a very hard habit to break. I used to use my credit card for everything. But if you can’t pay cash for something, you can’t afford it right now. Plain and simple. When you really break it down, does it make sense to owe somebody else for the bath bombs you wanted to buy?

Credit cards have such high interest rates most of the time that you are just throwing money away if you carry a balance. Cut up your card, freeze it in a block of ice, whatever you have to do to stop using that plastic!

Make a Plan to Pay Off Debt

In my experience discussing finances with other women, debt is the main reason most people feel stressed about their finances. Owing someone money can put a lot of pressure on you. Creating a plan to get out of debt will enable you to use your money to support your future instead of paying off your past.

The two most popular methods for paying off debt are the debt snowball and debt avalanche methods. With the debt snowball, you make a list of all your debt and pay each loan off starting with the smallest balance first. With the debt avalanche, you pay off your debt starting with the loan with the largest interest rate first, regardless of what the balances are. I have an entire blog post that walks you through these methods in detail!

Separate Your Bank Accounts

Having separate bank accounts can help keep your finances organized. Set up separate accounts for paying bills, spending, savings, and sinking funds. This will make it easier to make sure you’re not spending money that you need to pay your bills or should be saving.

I even have separate savings accounts for each of my sinking funds. Having a designated place for your money to go will make it easier to keep track of, which will make you more likely to continue tracking it! Just make sure you find a good bank that isn’t making a ton of money off you in fees if you have multiple accounts. (I like Chime! Find out more here.)

Reduce Your Expenses

I bet there are a few things you’re spending money on that aren’t totally necessary. Cutting out some of these things will free up more money you’ll be able to use to actually work toward your financial goals.

I canceled my gym membership, all of my subscription boxes, HBO Hulu, and Amazon music when I started getting serious about managing my finances. I promise it will be worth the time you go without to make great changes for your future!

You are in charge of your financial future. By taking control of your finances and changing your habits, you can set yourself up for the future you really want to live.