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How to Stop Living Paycheck to Paycheck

If you’re living paycheck to paycheck, that means all your money comes in and goes right back out again by the end of the month. That might not seem so bad at first. You’re staying on top of bills after all, right? But if that’s all you’re doing, there’s no way to look to the future—because you can’t afford to save any money yet. And there’s no real security with your money today. One little “life happens” moment can bring it all crashing down.

Hey, if that’s you, you’re not alone. These days, 78% of U.S. workers live paycheck to paycheck.1  But if you’re stuck in this cycle, you don’t have to stay there. Seriously! Don’t settle for the “not so bad.” Go for great. You’ll get extra breathing room with your money and gain security like you’ve never known.

11 Ways to Stop Living Paycheck to Paycheck

1. Get on a budget.

Maybe you don’t even know where your paychecks go. Bills. Payments. Food. You’re just keeping things paid and people fed. It’s time to start budgeting. Why? Because when you budget, you tell your money where to go instead of wondering where it went.

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When you budget, you’ll see spending habits you didn’t even know you had. Then, you can make the changes you need so you can reach your goals—for right now and far into the future.

We can’t say it enough: Budgeting is the foundation for all money management, and it’s the first step toward ending this paycheck-to-paycheck life. Don’t put it off. Get on a budget.

2. Take care of your Four Walls first.

When you’re setting up your budget, you’ll write down your income and then start subtracting your expenses. What expenses should you cover first? The essentials, aka the Four Walls. The Four Walls are your top priority, so make sure your budget is ready to pay for these things in this order before anything else:

  1. Food
  2. Utilities
  3. Shelter
  4. Transportation

After you take care of those, make a list of everything else you need to pay and tackle it in order of importance. When you run out of money, that’s it. You stop spending. But by starting with the Four Walls, you’ll know you’re keeping your family fed, your lights on, a roof over your heads, and gas in the car to get to work.

3. Start an emergency fund.

Let’s talk emergency fund. First things first, you need a starter emergency fund of $1,000. You might wonder why the heck you need to save right now if you’re busy just trying to make ends meet. But guess what? Knowing you have this buffer between you and life will bring you so much peace. It’s your safety net for those “life happens” moments. If you get into a jam, you can pay cash without worrying about which bills you’ll have to skip this month to cover things.

Listen: You absolutely can save up $1,000—you just have to make small (but intentional) daily, weekly and even monthly changes. And it will be totally worth it.

4. Stop living with debt.

Okay, so here’s the deal: Debt holds you back. It’s got you paying off last year’s Christmas presents in June. And then you’re stuck paying off that beach vacation in December. You can’t get ahead like that.

And debt is getting sneakier and sneakier. These days, installment payment companies are on the rise. They tempt you at checkout by saying you can pay for that French press in four easy payments. Do you really want to sink money into your fancy coffee maker for four months? (No.) Listen. Living with debt (of any kind) is one of the biggest things keeping you in the paycheck-to-paycheck cycle.

Get. Out.

Here’s how: First, stop taking on any kind of new debt! That means stop paying for things with a credit card. Don’t take out a new car loan. Say “Heck no” to saving 10% on that cardigan by opening up a store card, which will actually cost you in the long run. Next, kick your debt to the curb by paying it off smallest to largest using the debt snowball.

Think of it like this: When you make your budget, how much of your money goes to debt payments every month? That’s how much extra you’ll take back when the debt is gone. Goodbye, payments. Hello, progress.

5. Sell stuff.

Now it’s time to bring in more money! One of the easiest ways to get your hands on some extra cash is by selling whatever you can. Maybe that’s your jewelry, clothes, baby items, or even the extra car sitting in your garage. (Yes, really! At least think about it.)

Look, if you can part with something and get cash, do it! You’ll give your bank account or budget some extra padding, which is overwhelmingly helpful when you’re living paycheck to paycheck.

6. Get a temporary job or start a side hustle.

If you’ve set a budget and sold some stuff, but you still can just barely make ends meet, you might need a steady way to increase your income. Find a second job or side hustle.

Some great options for making extra money are waiting tables, driving for Uber or Lyft, being a barista, working at a call center, or signing up to be a substitute teacher. There are even plenty of work-from-home jobs you can do after hours or on the weekend too.

Yes, it will be hard. But this is only for a season. Once you get some money in savings and debt out of your way, you can slow down again.

7. Live below your means.

This is important, so don’t skip over it: Making more money will do you no good if you keep spending it all (and then some). Don’t start a side hustle and keep living a lifestyle you can’t afford. If you aren’t careful, a bump in pay can make you spend even more money. That’s called lifestyle creep or lifestyle inflation. All of a sudden, you can afford things you couldn’t before—and you might start becoming pretty loose with those purse strings.

Sure, it’s tempting to spend more money when you’re making more of it, but don’t do that! Remember why you took on that extra job in the first place. Stay intentional, pay attention, and stick to your budget.

8. Look for things to cut.

If you’re living paycheck to paycheck, this isn’t the time to buy T-bone steaks for dinner, take a fancy vacation, or visit your favorite restaurant. This is the time to cut spending. Look for any area in your budget where you can spend less.

Cut cable. Call your internet and phone providers to downgrade or stop your service for now. Go to the library and parks instead of spending entertainment money. Stop eating out. (Yes, we said it!)

We know making sacrifices like this doesn’t feel good. It hurts! But keep reminding yourself: This is not forever. You’re making temporary sacrifices. It’s time to put in the work now so you can be in a better position in the future.

9. Save up for big purchases.

Nothing makes you count down the minutes to payday more than if you just blew a ton of money on a big purchase. So, if you see something coming, like you notice the tread is getting real worn on your tires, save up and pay cash. That way you’re putting a little away each month instead of blowing an entire month’s budget.

Secondly, when you’re living paycheck to paycheck, you shouldn’t make nonessential big purchases. We mentioned vacations, but think of the stuff you know you want (but just don’t need) like that awesome gaming system a friend is selling. Even if it’s a great deal, this isn’t a great time. So just say no.

10. Meal plan.

Food. It’s the first of those Four Walls, and you’ve got to eat. But it’s also a budget category that can get out of control if you aren’t careful. When you meal plan, it’ll help you avoid the temptations of the drive-thru because you know what’s for dinner back home. Plus, you’ll spend less on groceries when you know exactly what you need to buy for the week. No more random impulse purchases or tons of fresh veggies (bought with good intentions but no plans) that end up moldy in the trash!

You’ll waste less and spend less, which frees up space in the budget and helps you move ahead.

11. Remember your why.

Living paycheck to paycheck can feel like getting stuck in a revolving door with your money. You’re going around and around and never going anywhere.

As soon as you decide you don’t want to go in circles anymore, you start all these tips and make movement. It can be slow. It can be hard. Some days you might want to give up.

Don’t give up.

When things get harder, remember your why. If it helps to think about the big future goals you’re working toward one day—traveling during retirement, paying for your kids’ college tuition, or buying that condo on the beach—then do that.

If you just need to think one step ahead right now and imagine a life where there’s no fear of overdraft fees or hearing your card has been declined, then focus on that. Because it’s coming.

Remember your why on that shift delivering groceries. Remember your why when you hold back from hitting “add to cart” even though you really want (but don’t need) the shoes. Remember your why when you make your own coffee and skip the barista. Some days will be more challenging than others. And making such a huge change in life will be tough. But you’re tougher.

Stop Living Paycheck to Paycheck and Start Living Again

Hey, guess what? You don’t have to figure this all out alone. Ramsey+ will teach you how to manage your money—step by step—and give you the tools you need to reach your goals—big and small. Get out of the cycle. Make real progress. Start your Ramsey+ free trial today so you can stop living paycheck to paycheck and start living again.

Ramsey Solutions

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners.

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