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Living paycheck to paycheck? Six Tips to Break the Cycle.

by LSS Financial Services

Living paycheck to paycheck? [6 tips to break the cycle]

Living paycheck to paycheck can be an easy trap to fall into and hard to get out of.

When payday comes, you might rush to pay all your bills, then find yourself saying, “Ugh! I just got paid, and I’m already broke.” Or, after you’ve paid your bills, you decide to treat yourself to a night on the town and spend more than you originally planned. You find yourself consistently using lines with friends and family such as, “I’d love to go have dinner tonight, but I can’t afford it.” The recent pandemic, which caused sudden changes in employment and high inflation rates, has made managing our finances even more difficult. However, it is possible to regain control, even if you’re caught in the cycle of living paycheck to paycheck. Here are six tips to break that cycle.

1) Track spending and build a realistic budget

This is an essential first step. It’s easy to track fixed expenses such as your rent/mortgage, car payment or cell phone bill. Accurately tracking other expenses can be more challenging, however.  

Start by listing all expenses that you know off the top of your head. Then look through your previous spending records (e.g., credit card and bank statements) for past spending patterns on variable costs, such as groceries or household supplies, and regular periodic expenses (e.g., water/sewer or online subscriptions). Examining the last three months of expenses will usually give you a good indication of what you’re spending. To determine what you are truly spending, start tracking your expenses. Take each receipt and record it. Tools for tracking expenses can include:

Using the information you gathered, calculate the monthly average for each expense to build your budget. Choose the best budgeting style for you. One option is the envelope system. For other budgeting style ideas, read this NerdWallet article .

2) Cut the budget “fat”

Examining, reducing and controlling expenses might not be easy, but this can help create a stable financial future! Don’t know where to start? Here are some ideas to reduce spending and save money:


  • Find roommates to share the mortgage or rent payments and split utility expenses.
  • Offer to manage your apartment building or do mowing/shoveling in exchange for reduced rent.


  • Downsize telephone service plans. Use a landline or a cell phone, not both.
  • Reduce digital television programming subscriptions; bundle them with other services or cancel entirely.
  • Cancel your internet service and access it at the library, a friend’s home or at work during breaks if your employer allows it.


  • Make a list of clothing or accessories that you truly need, then watch for sales. Clothing tends go on sale after major national holidays in May, July, November and December.
  • Buy at consignment shops, thrift stores and yard sales.

Gifts and Donations

  • Gift your time and talent to friends and family, or create personalized gift coupons for them to redeem.
  • Draw names for holiday gift giving instead of buying a separate present for each person.
  • Instead of making monetary donations to charities, consider volunteering your time or donating items.


  • End unnecessary or unused subscriptions.
  • Pool subscriptions with friends or family.

3) Incorporate savings into your budget

ALWAYS include an amount for emergency savings. One reason people find themselves living paycheck to paycheck is an unexpected expense (e.g., a major car or home repair). A reserve fund gives you something to fall back on in case these unexpected expenses come up. You can start small when building your savings. Even $25 a month can make a major impact. When able, try to increase that amount down the road. While it might not seem like you can afford to save for emergencies right now, the average person can’t afford NOT to save. Having savings for unexpected expenses or emergencies is key to living without debt and preparing for potential financial hardships. To get into the habit of saving, set up automatic deposits from your paycheck into a savings account, or transfer a designated amount each month from checking to savings, treating it like one of your regular bills. Even saving loose change adds up; putting it in a jar or some safe place where you resist the temptation to spend can help. Just start!

4) Plan ahead to avoid spending extra money

  • Create a regular meal plan, and buy groceries according to that plan so you’re not dining out or buying takeout on the run as much.
  • Give yourself an allowance for planned events like nights out with friends. Once it’s gone, don’t spend anymore. Or, avoid unnecessary purchases Monday through Thursday if you know you’re going out on Friday.
  • If you have several errands to run, cover them all in one trip to save money on gas.
  • Save for big purchases such as birthdays, holidays or vacations. A lot of credit unions and banks allow their customers to open multiple savings accounts. This can help you budget effectively for these expenses, and you can label each account for a different savings goal.

5) Increase your income

  • Rent out a room in your home, or rent out your unused garage or storage space.
  • Sell assets, such as boats, extra vehicles, merchandise or real estate.
  • Hold a rummage sale or use an online auction service to sell household items.
  • Take on additional hours at work, get a second job or look into the gig economy
  • Direct less to your retirement funds. Consider an early withdrawal from retirement funds or investments only as a last resort to prevent a financial crisis. Speak to a tax advisor about potential early withdrawal penalties and tax liabilities on withdrawals from these types of assets. **Note: this is a last resort if you have exhausted all other options. Do what you can to continue to save for retirement and avoid early withdrawals.

6) Bonus tip! Live below your means

Unless you change your mindset and learn to spend less than you earn, you can do all five tips above and still be caught in the paycheck-to-paycheck cycle. While it might not be easy, it is the most effective way of getting out — and staying out — of this cycle. It involves disciplining yourself to watch your spending habits and saving extra money resulting from cutting expenses and/or increasing income. Debt can also make it difficult to break this cycle. LSS Financial Counseling has certified, nonjudgmental financial counselors who can provide options for paying down debt faster. Counselors can also offer additional budgeting strategies, help navigate student loans, and give ideas to improve your credit, plus much more. Call 888.577.2227 or get your support online.

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