“Thank God it’s payday!” If you’re like many Americans, you’ve probably uttered that phrase at some point in your life. Three-quarters of workers are living paycheck to paycheck, a 2016 CareerBuilder survey found.
Stretched budgets and overdrawn bank accounts are a problem for people at all incomes levels, the survey found, though minimum-wage workers unsurprisingly were hurting the most. To get by, some people said they had stopped contributing to their 401(k)s, and many others reported being in credit card debt.
Constantly scraping by takes a toll, both financially and mentally. There’s the worry about whether you’ll be able to pay your bills, the high cost of late fees, debt, and last-minute loans. There’s the nagging uncertainty about the future. (Will I be stuck renting forever? Will my kids be able to go to college? Will I ever be able to retire?)
Getting out of the paycheck-to-paycheck trap isn’t easy. You might need to rethink how you spend money, make big lifestyle changes, or even take a long, hard look at your career choices. But the good news is you can make it to stronger financial footing. Follow these 10 steps to make it there.
1. Diagnose the problem
You need to find out why you’re living paycheck to paycheck. Clearly, it’s because the money you have coming is either just barely enough or not enough to cover your regular expenses. But how did you end up in that situation? You could have a six-figure income and still always end up broke at the end of the month if you have a shopping addition. Or you could be stuck in a low-wage job in a high-cost city, which makes it hard to make ends meet. Maybe a lifestyle change, such as one parent quitting work to stay home with the kids, has left your finances out of whack. A little soul-searching early on will help you get a feel for what’s causing your money problems.