Living paycheck to paycheck? You can break the cycle

Check out these tips for more effectively managing your cash flow


Only earning enough money each month to cover your bills and living expenses is not just an issue for low and moderate-income earners in America. A new survey shows that up to half of those bringing in six figures annually also lead a paycheck-to-paycheck existence.

A survey of 3,250 U.S. residents conducted in February 2022 revealed that just making ends meet every month is how many Americans manage (or don’t manage) their cash. Some 62% of those polled showed that 50% of U.S. residents in the survey who earn more than $100,000 a year live paycheck-to-paycheck, up from 48% in January 2022. The share of those earning less than $50,000 a year who live paycheck-to-paycheck rose to 80% in February 2022, up from 77% the previous month.

The challenge with a paycheck-to-paycheck lifestyle is that it often doesn’t leave room to pay for emergencies that will eventually pop up. If you are spending everything you earn, and not saving for rainy days in an emergency fund AND for retirement, you may be forced to pay for unforeseen expenses using high-interest credit cards or loans. That can lead to a cycle of debt that keeps you from gaining financial freedom. Not saving for retirement can mean you aren’t able to leave the full-time working world as soon as you would like because you simply don’t have the means to do so.

Here are some strategies to help break the paycheck to paycheck cycle and finally get ahead:

See where you stand

Before you can truly take control of your finances and start saving more, you must get a handle on where all of your money is going every month. You can do this by reviewing a few months of your bank or credit union statements and credit card bills. Don’t rush through this process. Dig in and go line-by-line. If there are obvious places you can make cuts, such as memberships you no longer use, that’s a good place to start.

Set financial goals

When you have a better idea of how much you are spending on take-out meals and everything else, set aside a little more time and ask yourself what you want your income to help you accomplish in the near future, in the next year and in the next five or ten years. This is where you can lay out a path that can eventually help you save the money to pay for a new house, a wedding, a college education and retirement.

Commit to a budget

Even if you started a budget and failed several times, it’s not too late to try it again. If the “b” word makes you cringe, then think of it as a spending plan or a way to map out how your money will work for you this month or this year. Those with access to the SavvyMoney tool can take advantage of an online budget planner. You can also go about it the old-fashioned way with a digital or paper spreadsheet. Create a line for every monthly expense, including housing, utilities, transportation costs, food, streaming services, insurance, etc. If this adds up to more than you bring in, it’s time to adjust.

Build an emergency fund

The easiest way to save some of the money you make now is to automate the savings so that it’s deducted from your account every time you are paid, or at least once a month, and moved to a different account at your financial institution. Out of sight truly is out of mind. You will be amazed at how quickly your savings will add up.

Consider side hustles

If you find yourself in a financial hole, it’s time to stop digging, or spending, as the case may be. If you have the bandwidth, you could take on a side job, at least for a while, as a way to pay off high-interest debt. You could also get more training as a way to earn more at your present job. Once you pay off high-interest debt, start saving more. A good rule of thumb is to save 15 to 20% of your take-home pay for retirement, which can include what you stock away in a 401(k) or similar plans.

With reporting by Casandra Andrews

Jean Chatzky

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