How to Stop Living Paycheck to Paycheck

A couple works on their finances
© Dean Mitchell / Vetta / Getty

You know you’re living paycheck to paycheck if you find that you’re consistently running out of money before your next paycheck arrives. If you frequently have to borrow money from friends or relatives, take out payday loans or cash advances, or use your credit cards to cover your expenses until your next payday, then you’re living paycheck to paycheck.

According to a 2015 CareerBuilder survey, 61% of workers say they live paycheck to paycheck.

The number is significantly higher than the previous year when 49% of workers reported living paycheck to paycheck.

Why Living Paycheck to Paycheck Is So Dangerous

The problem with living paycheck to paycheck is that you’re susceptible to financial damage. It’s easier to accumulate a lot of credit card debt or worse, payday loan debt. The more credit card debt you accumulate, the higher your minimum payments will be. Before you know it, you won’t be able to afford your minimum payments and you won’t be able to borrow more money to make ends meet.

Because your future is dependent on your current spending, you have to stop living paycheck to paycheck now.

How to Stop Living Paycheck to Paycheck

You’re living paycheck to paycheck either because you’re not budgeting or because you don’t make enough money to cover your expenses.

Start by creating a budget (or fixing your broken budget). A budget helps you plan how to make the most of your income.

Creating a budget lets you know ahead of time whether you make enough money to make ends meet. If all your expenses fit within your budget, then your income is enough and your spending is the problem.

Track your spending. If your budget isn’t working, track your spending to figure out where your money is going.

Save your receipts for a few weeks. Separate them into categories like gas and food, then add up receipts for each category. This will let you see where you’re spending the most money. If you have online checking and primarily use checks and your debit card, you may be able to download your transactions into Excel or a finance software like

Cut your expenses. Once you figure out where money is leaking, you can start plugging the cracks. This process might require some lifestyle changes. For example, if you’re used to buying a $5 latte every morning before work ($100 a month), you can start making coffee at home ($20-$25 a month), or going without coffee completely. You might have to get rid of the expensive cable package, because if you’re living paycheck to paycheck, you really can’t afford it.

Increase your income. Increasing your income isn’t always a possibility, but there are options outside getting a raise. If you typically get a tax refund, you may be able to change your tax withholding and get more money in your paycheck each month. Of course, that will mean you get a lower refund (if you get one at all), but you’ll have more money to use during the month. You might also consider working part-time or making money on the side with a hobby.

Beware: making more money won’t always solve your paycheck to paycheck problem. CareerBuilder reports that 30% of workers making six figures or more say they’re also living paycheck to paycheck.

Change your attitude about money. Often people who live paycheck to paycheck don’t make the wisest spending decisions. They sometimes overestimate how much money they can spend and end up spending more money than they really make. You may find yourself spending more money on things you want than things you need. Or, it could be that your money is slipping through cracks you didn’t know were there. Whatever, the case, setting up a budget and paying close attention to your spending will help you get back on track.