Am I the only one who goes through periods in my life where it seems as if there just isn’t enough money to my month? I know I can’t be and in fact, one of the most common things that I hear from Six Dollar Family readers is that they are looking for ways to stop living paycheck to paycheck and ways to help put their personal budget on more solid ground. I hear it at least fifteen times a week which tells me one thing; it’s quite common. Luckily – for both you and me – there are things we can do to stop living paycheck to paycheck so getting on solid ground financially is easier for your family.

When you’re trying to learn how to stop living paycheck to paycheck, the biggest thing you’ll need to know is why you’re living paycheck to paycheck in the first place. If you don’t understand it, how will you fix the issue that is causing it, right? Maybe it’s just me that needs to know why I’m doing something to break the habit, but I don’t think so.
How to Stop Living Paycheck to Paycheck {and the Real Reason You Are}
I could lie to you and give you a bunch of fake reasons why you are living paycheck to paycheck but the honest truth is that it boils down to one, single, lonesome reason and it’s actually a pretty simple reason. The reason you’re living paycheck to paycheck is simply because you’re living above your means. In case you’re not familiar with that phrase, it simply means that your lifestyle costs more than you can afford.
Here’s the kicker about living above your means though; it may not be caused by a spending habit or living un-frugally. Quite a lot of the time, it is simply caused by not making enough money. Whether that is your fault or not is for you to decide, but no matter whether it is or not, there’s only one thing to really do about it if this is the case with your family budget and that is to make more money.
It shouldn’t surprise you that I say that since it really is common sense. If you don’t have enough of something you need, you need to get more of it. It doesn’t matter whether that need is food, money, or clothing. It also shouldn’t surprise you that making more money is one of the things you may need to do to stop living paycheck to paycheck.
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First, to find ways to stop living paycheck to paycheck, you need to know exactly how much money you have coming in each month as income and how much you have going out each month as expenses. This is the tedious part of the whole shebang and also the part that will take you the longest. The simplest way to do this is to track your income and expenses in a budgeting book or a budgeting printable like THIS one.
Those won’t work for everyone though. At least I know they didn’t for me. I still spent more than I should have been because I wasn’t doing the tracking I should have been. Hey, I’m human too. 😉 If the budget book or printable don’t work for you, try carrying a checkbook register or using a budgeting app instead. Of the four, one of them is sure to work.
Take a month and track both your income and your expenses. If you have more expenses than income, you’re living above your means. If you’re living above your means, you now know why you’re reading an article on how to stop living paycheck to paycheck. Take a look at your expenses, group them together by type and figure out where your money bleed is. Chances are good its something along the lines of restaurants, extra curricular activities and hobbies that are eating most of your money. If not and you’re not wasting money anywhere, you fall into the “need to make more money” category we talked about a few moments ago.
If you fall into the make more money group, stop reading right here and head over HERE to check out these home business ideas. There are no MLM involved and most of them are things that anyone can do in their spare time. Make sure to bookmark this post though so you can come back to check it out once you’re done with the other one.
Update Your Personal Budget – Once you know that why you need to stop living paycheck to paycheck, it’s time to update your personal budget. When you do this, make sure to keep in mind those areas that you’re bleeding money. If you feel like you absolutely can’t avoid spending the money, budget for those areas instead. I do want to point out though that you’re trying to stop living paycheck to paycheck and ideally you should take your budget down to your basic needs. I like Dave Ramsey’s explanation of this in his Financial Peace University system. He calls it the “4 walls” as if you’re building a house. Everyone has the same 4 walls; food, housing, clothing and transportation.
As you’re updating your budget, be sure that you’re only including needs. Knowing how to tell the difference between want vs. need is important to you being able to stop livig paycheck to paycheck. You’ll also want to be thinking of ways to save money in your different budget categories. If your grocery budget is too high, find new ways to save money on groceries like THESE, by freezing food you buy on sale to keep it fresh (and avoid paying full price when you need it again, or by finding new things to make homemade you can stop buying. If your power budget is too high, look for ways to lower your electric bill. If your grocery or incidentals budget is too high, look for things to reuse to save money.
I’ve even moved my daughter and I into a hotel to live so we could save money and since we’ve been living in a house again, my family has found ways to go zero-waste to save money. Finding new ways to save money needs to be a constant in your life even after you are able to stop living paycheck to paycheck and sometimes, you have to think outside of the box to find those ways.
Get rid of the forgotten – Another reason your expenses may be too high is things you’ve forgotten. Things such as Hulu that you’ve been paying for so long it’s second nature. If you’re worried about losing TV, there are ways to watch tv online legally without needing those things in your budget. Another thing that gets forgotten quite often are free trials that you’ve signed up for. Before you realize it, you’ve paid for the entire thing and you’re short money in your budget.
Get Caught Up – The next step in learning how to stop living paycheck to paycheck is to get caught up on any needs that you’re currently behind on. This is incredibly important. Being behind on your bills leaves you open for high late fees, auto charges that you can’t cover, non-sufficient funds fees, utility shutoffs or even losing your home. Getting caught up may seem hard, but if you break it down, it isn’t nearly as complicated as it seems. The steps look like this:
- Make a list of all bills you’re past due on.
- Figure out how much money you’re currently working with.
- Split that money between your bills.
- Rinse and repeat with each paycheck until you’re caught up.
I know. Seems simple, but is probably hard? Not necessarily, but I will admit that it is more work than it seems.
First, make a list of all bills you’re due on and list them from the most important to least. This means if you’re past due on your house payment, it should be listed before your electric bill. After all, what good does electric service do if you have no home?
Next, figure out the amount of money you are able to use to pay on those bills. Once you have that amount, split it between the bills on your list making certain the most important ones receive the largest amounts. Try to make a payment on every necessity if possible.
Do this with every paycheck or extra income you receive until you are caught up. It won’t happen overnight so try not to get discouraged.
Review Your Accounts – Once you’ve got everything caught up, review your accounts to see if there are any you can change to save money. Is your bank charging you too many fees? If so, look at whether it’s worth it to switch to a fee free checking account like THIS one or fee free savings account like THIS one. Is your cable bill too high? Why not drop it and go with Amazon Instant Video (get a FREE 30-day trial to Amazon Prime HERE), Hulu or Netflix to save money. Is your cell phone bill too high? Consider going pre-paid with a company such as Republic Wireless where the monthly payments can be as low as $20 a month instead of $100 or more.
You can save on your power and natural gas bills too if your state allows you to choose your provider. Changing providers can be a fantastic way to get a lower rate and lower your expenses for them. You’ll also want to check if the companies you purchase service from offer discounts. Some of the more common ones are military or veteran discounts, discounts for first responders, or AARP/retired discounts.
Reset your spending habits – After you have your budget updated and you’ve gotten yourself caught up, it’s time to reset your spending habits. If you can’t, you will soon find yourself needing to stop living paycheck to paycheck again. Be sure that you budget money in your new budget for those wants since impulse buys are needed in your budget whether you realize it or not. You’ll also need to make sure that you can afford to do that. Do not add any wants to your new budget until you are on solid ground and can afford the extra money. While you’re in the reset mode, make sure to take a look at how you’re thinking about things. Whether you realize it or not, your thoughts can keep you poor.
Prepare for the next financial crisis – Like it or not, your finances are always in danger of becoming unsteady. This is true even for the wealthy. The best way to make certain you can cover what you need is to prepare your family budget for a financial crisis before one happens. To do this, first learn how to create a crisis budget that you will only use when you’re facing one. Then, save 3-6 months of expenses as an emergency fund, build a sinking funds account for expenses you know will be coming, and so on. By preparing yourself ahead of time, you’ll be ready when disaster strikes.
Make more money – As I said in the beginning of this post, if you don’t make enough money to cover your very basic expenses, you really only have two options. Those are to cut your expenses as far as possible which we’ve already talked about and to make more money which I’ve touched on already. It doesn’t matter if you’re doing online surveys that will pay you FREE gift cards or if you take the time to start a home based business that you can earn from. You could also learn how to start a blog to make money as well since that can be done in just a few minutes with no experience needed. No matter how you do it though, if you don’t make enough money to stop living paycheck to paycheck. Make more. There is no way to sugar coat that. It is the same for anything in our lives. If you don’t have enough of something, you need to get more.