How to Stop Living Paycheck to Paycheck

5 min read
Paycheck to Paycheck

If you’re struggling to stay ahead of your finances, you’re not alone. According to a Reality Check: Paycheck to Paycheck survey conducted by LendingClub and PYMNTS, 60% of employed U.S. adults, including more than four in 10 high-income earners, are living one paycheck to the next with little to no financial cushion.

Living paycheck to paycheck means there’s no wiggle room in your budget for rising costs or unexpected expenses. Depending on your personal financial situation, you might be one trip to the grocery store or a couple of large, unexpected medical bills away from financial trouble.

If this sounds like you, there’s hope. You can reverse course by digging into your monthly expenses, taking steps to manage debt, and looking for opportunities to boost your income and save. Here are the basic steps to help you stop living paycheck to paycheck and gain control over your finances.

1. Track Your Expenses

Budgeting starts with tracking expenses. Even if you’ve done this before, you may have good reason to review your spending again. If you’re coping with the rising cost of living or you’ve recently gone through a life change—like the birth of a child, sending a kid off to college, or transitioning from remote work back to the office—your spending (and costs) may have changed significantly. Whatever the reason, if you’re out of cash at the end of every month, putting effort into tracking your expenses will shine a light on what’s causing it.

Take 30 days to account for every dollar spent. From automatic payments to every cash, credit card, and debit transaction you make—divide your expenses into categories and take a look at on what and where you’re spending money.

2. Evaluate Your Spending

Once you know where you’re spending, you can make decisions about how to allocate your money. Be prepared to accommodate increases in some categories. If the price of gas, utilities, or groceries has risen, you may need to cut back elsewhere to make room.

Get rid of waste. Look at your spending and cut out expenses you don’t need or want. Forgotten subscriptions and unused gym memberships are classic examples.

Tighten up spending by shopping at less expensive stores, choosing cheaper brands, getting your hair cut less often, eating in—you know the drill. Set daily or weekly spending targets to help you stay on budget, rather than finding out mid-month that your whole month’s grocery allowance is already spent.

Look at essential spending: If your lifestyle is relatively lean but you’re still having trouble making ends meet, you may want to consider further cuts to your spending, for example, finding a less expensive place to live. These decisions aren’t simple or easy, but making a major change in your monthly spending can go a long way toward easing the pressure on the rest of your budget—and your peace of mind.

3. Build Up Your Savings

Experts suggest keeping three to six months’ worth of living expenses in an emergency savings account. That’s a worthy short- to medium-term goal, and it starts with building a serious savings habit.

When you live paycheck to paycheck, generally nothing (or very little) is going into your savings. Instead, try setting aside 1% of every paycheck—that’s only $10 for every $1,000 you earn. As your finances improve, you can increase your rate of savings gradually. As your emergency fund grows, you and your finances will become more resilient. Eventually, you’ll create room in your budget to build up additional regular savings beyond what you set aside only for emergencies.

Also, consider automating your savings by having a set amount automatically routed to savings each time you get paid. This means you won’t see (and therefore won’t spend) the money you transfer to savings, and you won’t forget to make the transfer. Fund a “goal” savings account with recurring automatic transfers to save for a new roof, a weekend away, or holiday gifts.

Make sure your money is working for you. Interest rates on high-yield savings accounts have risen with inflation and rising interest rates, which means it’s worth your time to open an account that earns a better return. Once you’re set up, the interest you earn is effortless.

4. Manage Debt

One of the potential pitfalls of living paycheck to paycheck could be relying on high-interest credit to cover costs. When you don’t have the cash to meet an unexpected expense—or an unexpectedly high utility bill—you might turn to using credit cards to help bridge the gap.

Most credit card interest rates are variable, and generally are moving up as interest rates rise. For example, according to Bankrate, as of July 2023 the average credit card APR is 20.58%. Rates on individual cards may be significantly higher—25% or more—with even higher APRs if you were to take a cash advance or miss a payment.

Getting a handle on your spending and building up your savings can help you avoid over-reliance on high interest credit cards for your daily expenses. If you already have revolving, variable rate credit card balances, now is the time to find room in your budget to pay them down as quickly as possible.

Getting a debt consolidation loan may help if you carry balances on multiple cards. By rolling high-interest credit card debt into a single, unsecured fixed-rate installment loan, you may be able to streamline your monthly payments, lower your interest costs, and put an end point on your debt.

Managing debt is not only critical to reining in your monthly expenses and minimizing your overall costs, it’s key to maintaining good credit. Making a single 30-day late payment or over-utilizing your credit accounts can lower your credit scores, which makes it more difficult to secure a mortgage, car loan, personal loan, or low-interest credit card in the future. If you’re curious about the state of your credit, check your credit reports for free from all three credit reporting agencies at AnnualCreditReport.com.

5. Boost Your Income

Cutting costs isn’t the only way to rebalance your budget. According to the Reality Check survey, fewer than four in 10 consumers say their current jobs meet their wage expectations. Consider boosting your income with one of these strategies:

  • Ask for a raise. In a tight labor market, your proven skills and track record are worth money to your employer.

  • Ask for a promotion. Where can you move within the company to improve your income and long-term prospects?

  • Look for a better-paying job. If your current employer can’t (or won’t) raise your wages, salary, or offer a promotion, perhaps another employer will.

  • Sell what you don’t need. Furniture, clothing, bags, sneakers, collectibles, computers, and any other items you no longer need may earn you a few dollars. Bonus: you’ve decluttered and simplified your life.

  • Start a side gig. You don’t have to take on a second full-time job: try doing odd jobs from an online marketplace or rent out a spare room or garage space if that’s an option.

The Bottom Line

Budgeting, saving, paying down debt, increasing your side income—any steps you take to shore up your finances—is work. But putting yourself on solid financial footing can also alleviate the stress that comes with falling short month after month. It puts you on track to meet your financial goals, whether that’s saving for a much-needed vacation, putting money away for a home or college, or enjoying a guilt-free night out without worrying how you’ll pay for it.

As the cost of living fluctuates and your life circumstances change, living within your means can be an ongoing challenge. But it’s also the definition of living comfortably. Figuring out how to meet your expenses with money to spare is the bottom line. Master this skill and you’ll start gaining control over your money and getting ahead.

Check Your Rate
Keep more of what you earn and earn more on what you save.
Check your rate. It won’t impact your credit score.2
Privacy & Security

You May Also Like

Related Resource Center
Sticking to a budget can be challenging, but having a clear goal and rewards can help you stay on track.
Jun 27, 2024
4 min read
Person in blue shirt sitting at desk with notebook, laptop and phone
Are you making only minimum payments on multiple credit card and other debt balances? If you’ve got a bit of extra cash earmarked for debt repayment and need a little motivation to start paying those balances down, now could be just the right time to consider putting the debt snowball method into action.
Jun 26, 2024
8 min read
Soft inquiries won’t impact your credit scores, and hard inquiries can hurt your scores slightly. Here's what you need to know.
Jun 25, 2024
7 min read
woman on mobile phone image
Having a money plan in place before you turn in your resignation can make the transition smoother. Learn ways to prepare your finances before you go.
Jun 25, 2024
5 min read
Young man relaxing in an orange hammock by a misty lake holding a cup of coffee, looking at laptop on his lap.
A recent survey shows 60% of U.S. adults, including more than four in 10 high-income earners, are living paycheck to paycheck. How can we all get to a place where we’re empowered with our money?
Jun 25, 2024
5 min read
Related Impact
From groceries and diapers to Halloween costumes for pets, nearly 60% of American consumers prefer to shop online for everyday items that make life more convenient, comfortable, and enjoyable. And with rising prices showing no signs of stopping anytime soon, we’re pleased to introduce StackitTM from LendingClub Bank—a new browser extension that automatically finds and rewards eligible members with coupons and cash back for extra savings at more than 15,000 favorite online retailers.
Nov 13, 2022
2 min read
blog header stackit 765x430 v1-1
Even in today’s low-yield, high-inflation environment, it’s essential to keep a certain amount of money in an easy-to-access checking or savings account for things like daily household and emergency expenses, or to meet short-term financial goals.
Oct 2, 2022
5 min read
LendingClub Rewards Checking Nationally Certified as Trusted, Afforda
Since 2007, LendingClub has been on a mission to deliver a world-class experience to all our members. This month we took a moment to reflect on the more than four million members who have chosen LendingClub as their partner to help them reach their financial goals.
Apr 19, 2022
2 min read
Illustration of large number 4 and letter M made up of colorful, tiny illustrations of ethnically diverse people
In March 2022, we hosted our first quarterly webinar where we celebrated our one-year anniversary as a digital marketplace bank. 
Mar 6, 2022
less than a minute read
LendingClub completed the acquisition of Radius Bank in February 2021. At that time, in addition to the direct-to-consumer deposit business, we inherited a fintech partner program, and several lending businesses. As we reach the one-year anniversary of the acquisition, and in conjunction with the conclusion of a strategic review of our business operations, we have made the decision to discontinue certain businesses that don’t fit our mission.  
Jan 2, 2022
2 min read
Man in blue button up shirt and glasses smiling
Related FAQ's
We offer several ways for you to make your monthly auto loan payment, so you can choose the method that works best for you. A statement will be mailed to you every month that shows the payment amount and due date.
Nov 29, 2023
less than a minute read
LendingClub provides a year-end statement that summarizes your account activity, including how much interest you’ve earned and information regarding Notes tied to loans that have been charged off.
Jun 7, 2023
less than a minute read
Adding creditors to your balance transfer loan is easy.
Jun 7, 2023
3 min read
To qualify for a lending product with LendingClub Bank, you must...
Jun 7, 2023
less than a minute read
Applying for a lending product is fast, easy, and confidential.
Jun 7, 2023
less than a minute read
Related Glossary
{noun} A type of credit that allows the borrower to make charges and payments against a set borrowing limit, paying interest only on outstanding balances.
Sep 6, 2023
4 min read
{noun} The total annual cost to borrow money, including fees, expressed as a percentage.
Mar 21, 2023
3 min read
{noun} The amount of unpaid interest that has accumulated as of a specific date, either on a loan or an interest-bearing account or investment. 
Mar 21, 2023
4 min read
A debt that is written off as a loss because the financial institution or creditor believes it is no longer collectible due to a substantial period of nonpayment.
Feb 7, 2023
3 min read
{noun} An interest rate that remains the same for a set time, usually for the life of the loan.
Feb 4, 2023
3 min read

LendingClub Bank and its affiliates (collectively, "LendingClub") do not offer legal, financial, or other professional advice. The content on this page is for informational or advertising purposes only and is not a substitute for individualized professional advice. LendingClub is not affiliated with or making any representation as to the company(ies), services, and/or products referenced. LendingClub is not responsible for the content of third-party website(s), and links to those sites should not be viewed as an endorsement. By clicking links to third-party website(s), users are leaving LendingClub’s website. LendingClub does not represent any third party, including any website user, who enters into a transaction as a result of visiting a third-party website. Privacy and security policies of third-party websites may differ from those of the LendingClub website.

Savings are not guaranteed and depend upon various factors, including but not limited to interest rates, fees, and loan term length.

A representative example of payment terms for a Personal Loan is as follows: a borrower receives a loan of $19,584 for a term of 36 months, with an interest rate of 10.29% and a 6.00% origination fee of $1,190 for an APR of 14.60%. In this example, the borrower will receive $18,663 and will make 36 monthly payments of $643. Loan amounts range from $1,000 to $40,000 and loan term lengths range from 24 months to 60 months. Some amounts, rates, and term lengths may be unavailable in certain states.

For Personal Loans, APR ranges from 9.57% to 35.99% and origination fee ranges from 3.00% to 8.00% of the loan amount. APRs and origination fees are determined at the time of application. Lowest APR is available to borrowers with excellent credit. Advertised rates and fees are valid as of July 11, 2024 and are subject to change without notice.

Checking a rate through us generates a soft credit inquiry on a person’s credit report, which is visible only to that person. A hard credit inquiry, which is visible to that person and others, and which may affect that person’s credit score, only appears on the person’s credit report if and when a loan is issued to the person. Credit eligibility is not guaranteed. APR and other credit terms depend upon credit score and other key financing characteristics, including but not limited to the amount financed, loan term length, and credit usage and history.  

Unless otherwise specified, all credit and deposit products are provided by LendingClub Bank, N.A., Member FDIC, Equal Housing Lender (“LendingClub Bank”), a wholly-owned subsidiary of LendingClub Corporation, NMLS ID 167439. Credit products are subject to credit approval and may be subject to sufficient investor commitment. ​Deposit accounts are subject to approval. Only deposit products are FDIC insured.

“LendingClub” and the “LC” symbol are trademarks of LendingClub Bank.

© 2024 LendingClub Bank. All rights reserved.