How to Stop Living Paycheck-to-Paycheck and Finally Get Ahead

Take these 5 steps toward a more financially secure future

A report released in the spring of 2021 showed that more than half of Americans – some 56% – said they were living paycheck-to-paycheck. Other research, including that performed for my book “The Difference” produced similar findings.
What does that mean exactly? It’s that after covering monthly expenses there was little left to pay for anything else or to save or invest for the future. That means not being able to get ahead enough to create an emergency fund to cover expenses when your car dies or you have an unexpected (or catastrophic) medical expense. And it often leads to using high-interest credit cards to cover the crisis, which can mean months or years of more debt to pay back, continuing the vicious paycheck-to-paycheck cycle.
But there is hope — if you’re willing to take action. It’s possible to prosper even in the face of challenging financial times, our research showed, if you can take these steps:


“The Difference” sought to answer the question of what separates those living paycheck-to-paycheck from the others who were financially comfortable and the wealthy. Our research, which surveyed 5,000 individuals, showed that overspending was the main reason people slipped from a place of financial security to a paycheck-to-paycheck lifestyle.

Beginning this month, make it a priority to spend less than you bring home. If you aren’t living within a budget, it’s time to sit down and figure out exactly how much you are spending and where. When you begin living below your means, by spending less than you earn, you leave money that can be put toward high-interest debt and savings.


We know that thousands of industrious people have been able to build wealth they did not inherit. Many of them possess certain personality traits including optimism, resilience, being a realistic goal setter and often a prudent risk-taker. One way to set yourself up for more success is to learn to practice those traits in moderation if they don’t come naturally to you. For example, to practice being a more optimistic person you could work to look on the bright side more often than only seeing the bad elements of a situation. Making a habit of searching for a silver lining, in your personal and professional life, could ultimately help place you in position to find your true passion in life.

When you tap into your passion, chances are you may no longer feel the need to overspend to fill up the emptiness within you. Those who are more self-satisfied, our research showed, were often inspired to take care of themselves in other ways by saving more, investing appropriately, and paying off debilitating credit card debt.


Setting aside some money in a separate account really can be life-changing for those who don’t have any substantial savings already. Even if you have to start really small, moving just $10 a week into a savings account, will mean you have $520 saved up in a year. In two years, of course, that’s more than $1,000 saved.


While saving for the future is vital, it’s also critical to pay off high-interest debt, such as credit card and store accounts, as quickly as you can. To do this, pay your bills on time every month and make more than the minimum payment. That way, you can watch your monthly credit card statements dwindle and eventually feel your spirits begin to soar.


Since you are hopefully already planning to live on less than you bring in, moving income from a raise directly into your savings won’t be such a challenge. You could also invest your raise, or a portion of it, into a 401(K) or other retirement account. If you receive other unexpected funds such as a tax refund or bonus, funnel that directly into savings as well.

With Reporting By Casandra Andrews

Jean Chatzky

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