4 Steps to Stop Living Paycheck-to-Paycheck

You worked hard all week at work, are Superwoman at home, and when payday rolls around, it feels like you have nothing to show for it, shuffling around bills, debt, and other expenses as soon as your check hits your account. If you feel like every paycheck is slipping through your fingers as soon as Friday rolls around, you’re not the only one: 59 percent of Americans are living paycheck to paycheck, according to a 2019 survey from Charles Schwab.

1. Give Every Dollar a Job

Instead of picking up 2-3 jobs in order to make ends meet, use a budget to help guide you to only spend the money you have available right now. With a budget, you’re able to look at how much you’re spending on necessities and obligations like housing expenses, credit card, or student loan payments each month and how much you spend dining out with friends and family. Breaking down your spending habits is easy with a tool like YNAB, which helps you budget to gain better control of your money.

Your budget on YNAB is broken down by category to help you sort out your expenses more wisely and see where each dollar is going:

Immediate Obligations (monthly fixed expenses like rent and utilities)
True Expenses (non-monthly expenses like tuition and clothing)
Debt payments (payments towards consumer and student loan debt)
Quality of Life Goals (self-care expenses like workout classes or spa treatments)
Just For Fun (anything goes, from vacations to dining out)

Being able to look at your spending by category helps you give each of your hard-earned dollars a job, whether it’s to help fund your next fitness class or to pay for your fixed expenses like your rent or mortgage. Your money should be used to fund the most important things in your life, and you deserve to be in control of each dollar as it comes and goes.

Knowing exactly where each dollar is going empowers you to make the right decisions with the money you already have. Your money should work for you–not only the other way around!

2. Embrace Your True Expenses

Your fixed monthly expenses could be as simple as rent, your transportation, and one or two credit card payments, but larger or uncommon expenses, such as car repairs, school tuition, or maintenance on your home, will come up, and you should be prepared. Breaking down infrequent expenses into smaller, more manageable payments can help you gain control of your money when those expenses arise.

The simple-to-use personal finance software YNAB does a great job of helping you take a bite-size look at your budget and show you how you can better manage your money to make way for future expenses. Future expenses should be treated like your current expenses and be included in your budget broken down into smaller “payments.” Those payments will eventually add up and help you pay for that new laptop or home repair expense in the future, instead of being surprised by them.

Reducing or cutting down on expenses like going out to eat or your standing weekly nail appointment can also help you shift your budget around to make room for larger expenses. Cutting back on a few “just for fun” expenses even for a few weeks could help you budget better and get back on track with saving smaller for a larger goal.

3. Roll With the Punches

The unexpected is bound to happen in life–and to your wallet. Building a budget helps you to be flexible financially when changes arrive.

Evaluate your budget on a monthly or even weekly basis to get the most out of your money when unexpected expenses come up. It’s probably likely that your budget will fluctuate month-to-month, with changes in variable expenses like utilities, car maintenance, and home expenses, so be prepared to move your money around from category to category to accommodate those changes.

Keep an eye out for any unexpected expenses you may anticipate ahead of time in order to prepare ahead of time for any changes to your budget. Have a girl’s trip coming up, gearing up for a move, or getting the kids ready for a new school year soon? Prepare to shift your money around in your budget in order to make way for those plans in advance.

A budget helps you anticipate these changes and gears you up to go with the flow financially. Just because you may have to shuffle around where your money goes each month doesn’t mean your budget isn’t working. Your budget is there as a guide to help you manage the money you have. No matter where each dollar may end up, your budget helps you gain control of where it goes.

4. Age Your Money

Ever find yourself anxiously waiting until payday so that you can cover your current month’s bills right before they’re due? No one should have to live on pins and needles, hoping their paycheck will cover all their current month’s expenses.

A good practice to adopt is to use the money you earned from last month to pay for your current month’s expenses. Having this breathing room creates more space in your budget to be proactive when unexpected expenses arise, as well as keeping all of your bills up to-date and current. YNAB helps you to live within your means financially so that your current paycheck isn’t paying for your present or playing catch-up but helping you fund your future.

Build up a cushion by using YNAB to fund categories in your budget for next month, or set aside a goal amount in a separate category to fund next month’s expenses. When a new month approaches, your expenses will already be covered, or saved up in a category, ready to cover all your expenses before the month even kicks off! That’s the beauty of having a great budget: you can manage your money better to save a few dollars each month to help fund next month’s expenses so that you aren’t bombarded with every bill all at once.

While you’re starting off small with using a budget to help you better control the money you already have, look for ways to make a few extra dollars to help jumpstart your goals and age your money better. A temporary side gig can help you reach a few of your short-term goals while maintaining your budget with the money you already earn. Additional income is good to supplement your regular paycheck, but shouldn’t be a crutch or a mainstay for maintaining your finances. Use a side job to get to where you want to go a little quicker while making plans to sustain yourself with only your current income.

Living paycheck-to-paycheck is an unsettling cycle no one should have to experience. YNAB helps you create a peace of mind around your money so that you feel more in control.