3 Ways to Stop Living Paycheck to Paycheck

In my opinion, there’s nothing worse than realizing that there’s a massive gap between your income and your expenses. And the truth is, this is more common than most want to admit if you’ve ever had to “borrow” from savings or a sinking fund to pay for this or that or even had to rely on a credit card to get you through to the next payday you know the gap.

And I’m certainly no stranger to that gap. And even though my family is 100% debt-free, we’ve still gone through seasons where that gap happens. It’s super for it to just pop up. We live in a fast-paced, consumer-driven society, so things can get put a little too much on autopilot, and you find yourself struggling to pay for things.

So how do we close the gap between our income and expenses to avoid living paycheck to paycheck?

The easy answer, of course, is to stop spending money, but that’s not realistic though. So what do we do?

Here’s my process for handling this:

1. Eliminate and Reduce.

Pull up your last month’s transactions from every account that you spend money on (so checking, credit cards, etc.). Then go through those expenses line by line. Highlight like expenses in the same color. So for all grocery expenses, highlight them in yellow. All fuel purchases highlight in green. All purchases that you can’t remember what you bought highlight in purple. And so on and so on.

Then tally everything up by category. This will give you an idea of exactly where your money is going every month. This is important. You need to know where the money is flowing to in order to stop the bleeding.

Once you know where your money is going, it’s time to decide on what you can reduce (so expenses like groceries) and what you can eliminate (buying stuff on Amazon without thinking about it).

2. Stretch the Budget.

I firmly believe it’s easier to stretch a limited budget than it is to make more money quickly. That’s why once you know where your money is flowing to, it’s time to make a real effort and stop the bleeding. Awareness is only part of the solution. You’ve got to take action now. So if you’re going to eliminate an expense, you’ve got to stick to not buying that. If you’re going to reduce your grocery budget, you’ve got to start by taking a real inventory of what you already have on hand. Trust me. Your brain is going to freak out if you don’t have as full of a cart as you normally do. The only way to prevent you from spending more is by having a written list of everything you already have.

So get creative and stretch the budget. Of course, you can also work on side hustles and sell off things to help close the gap as well. All those things will work to help seal up that gap.

3. Remember that this will take time.

Closing the gap between your income and expenses isn’t easy. And the bigger the gap, the longer it may take to close it. Don’t give up! Keep working on closing the gap, even when it’s hard. Yes, maybe this means you forego a family beach vacation this year and take the money you were setting aside in your sinking fund to pay off the credit card you’ve been relying on. Maybe it means fewer summer camps this year and more at-home adventures.

I know it can suck to have to say no to things. But the purpose of going through our spending is so we can get real with ourselves and where our money is actually going. We can’t fix the problem until you know the depth of the situation.

So if you’re living paycheck to paycheck right now and not sure what’s going on with your money, start by looking over your spending. Then decide where you can cut and reduce. Then spend the next 60 days working on closing the gap between your income and expenses. I promise you, in 60 days, you can be in a better position. All it takes is a little grit and some elbow grease. But you’ve got this!