Saving Money

How to Break the Paycheck-to-Paycheck Cycle

62% of Americans have no emergency savings.

47% of households don’t save anything at all.

And 76% of Americans rely on the next pay period, living paycheck-to-paycheck.

Your life doesn’t have to be this way. If you’re ready to break the paycheck-to-paycheck cycle, commit to taking a few simple actions each day to change your financial life. Ready to get started?

Carefully Examine Your Current Budget and Spending

If you want to break the paycheck-to-paycheck cycle, you need to do a few very simple, obvious things up front. Track your spending and evaluate where your money currently goes. Are there any surprises? Do you realize how much you were spending, and on what?

From there, eliminate some expenses. Understand that it’s not enough to live within your means. You need to live as far below your means as possible. Reducing spending in the “wants” category — like shopping, entertainment, and meals out — is the easiest way to give your budget some breathing room.

Then, Get Real with Yourself and Your Money

People struggle with burdens like credit card and student loan debt. There’s no denying this reality. But here’s another reality we need to face: many people with financial issues are dealing with problems of their own making.

Rampant consumerism encourages us to spend far, far more than we need in order to live fulfilled, comfortable lives. How might your life change if you committed to living well on less? Would your paycheck go further if you learned to want and waste less?

You can answer these questions after taking a long, hard look at your spending habits and your financial situation. It helps to understand that material possessions don’t bring lasting, fulfilling happiness, and we’re better off investing in our relationships and life experiences.

With this knowledge, you can break the paycheck-to-paycheck cycle by updating your priorities and values to include things that require little to no spending.

Take Advantage of Your Opportunities

The average American watches 5 hours of television per day. That is an incredible amount of time to sit and do nothing but keep our eyes glued to a screen. While relaxation and play are incredibly important to a healthy life, there’s something to be said for balance.

What does this have to do with breaking the paycheck-to-paycheck cycle? A few things actually. First, how many TV sets are in your home? How many cars do you own? How many pairs of shoes and items of clothing fill your closets?

And how much did these luxury items cost you?

Second, this fact points out another: we are wasting our time and therefore, our opportunities to do more with our lives. What if you spend just 2 of your 5 hours of TV-time on monetizing your knowledge to develop another income stream? What if you invested in yourself by learning something new (and then earned a raise at work with your updated skillset)?

When you stop to think about it, we all have the opportunity to improve our financial savvy. It all starts with asking yourself hard questions about your finances and using that knowledge to create an action plan towards achieving your financial goals.

So, ask questions. Challenge the accepted norms. Get outside your comfort zone and in touch with your priorities. You have the power to change your personal finances. But you must take action and create the change you want.

Kali Hawlk is a freelance writer and the co-founder of Off The Rails, a free mentorship platform for creative women. She’s passionate about helping others do more with their money, their work, and their lives. Get in touch by tweeting @KaliHawlk.