How Living Paycheck to Paycheck Taught Us These 10 Money Skills We Still Use
Written by
Jordan Rosenfeld
Edited by
Gary Dudak
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When Justin Brown-Woods and his wife Haley — financial coaches, podcast hosts and founders of the Price of Avocado Toast — were in their early twenties, they were just scraping by as restaurant servers, living paycheck to paycheck. An unexpected windfall in 2016 netted them a whopping $600,000, more than enough money to live comfortably for many years. Unfortunately, Justin told us, “Over the course of about three and a half years, we ended up blowing through that money and then getting into $220,000 worth of debt.”
They were right back to the paycheck-to-paycheck lifestyle by 2019, but now working as teachers and expecting their first child.
One day, an argument over the cost of muffins from Costco landed a reality check for the couple. “Rather than be excited about her getting some pastries and feeding a craving, I snapped at her and said, we don’t even have $7 in our account for you to be buying these muffins. This is not an expense we can afford now,” Justin said. “And it shook us pretty heavily.”
Once again scraping by and deeply in debt, the couple began their debt-free journey at that moment. Here are the 10 lessons they have learned that turned into money skills they advise others to use, as well.
Tackle Debt First
When Justin and Haley began to work toward repairing their finances, they leaned into zero-based budgeting, and put as much toward debt as possible. Part of this was breaking free of the cycle of paying the minimum monthly payment on their credit cards and using them as little as possible.
Limit Lifestyle Creep
Another important lesson was to recognize that they had been inflating their lifestyle due to the influx of money.
“We were renting a townhome in Santa Rosa we had no business renting. We were taking out student loans that we didn’t need to fund wine country trips and other things,” Justin said.
Seek Experiences Over Costly Outings
One of the key skills that Justin said they’ve learned is finding comfort and contentment in the experiences of everyday things. “As a family, we’ve found a lot of contentment in having dinners together with our kids at the table.”
The added bonus is that it saved them money on dining out. And when they do dine out, they save up for it, giving them something fun to look forward to.
They also take more walks and spend more time outdoors. “It’s just [finding] contentment in everyday life and not really trying to keep up with the Joneses particularly when we could no longer do that,” Justin said.
Small Savings Add Up to Bigger Gains
Another skill they’ve gained is recognizing that every little bit of savings counts. “One of the best ways we were able to get out of the paycheck-to-paycheck cycle and have some small wins was to be able to say, I’m going to start saving even just a little bit right now so that my future can look a little bit better.”
He pointed out that $5 a week adds up to $20 a month and $20 a month over the course of a year is more than $200. “Maybe that pays for some small thing or our Netflix subscription or something like that.”
Don’t Spend Everything You Make
Another skill they mastered was learning to hold onto money more effectively. When they brought in extra money — often by selling things on Facebook Marketplace — they learned to save it.
“So that was a big one, saying, hey, if I sell something I can save that money. I don’t have to go spend it,” Justin said. “We were caught in the paycheck-to-paycheck cycle of ‘if I have money, it’s meant to be spent.'”
Budgeting and Tracking Expenses Are Different
A money skill Haley found useful is recognizing that creating a budget and tracking expenses are two different concepts. “One of them is just planning how you want to allocate your money, and then the other one is the actual reality piece, which a lot of people are missing, about tracking where everything is actually going,” she said.
She also said the numbers don’t lie. “When you see exactly where everything is going, it’s a lot easier to then take a step back and see what’s necessary, what can be cut, and if there is any area in the budget to free things up.”
This allows a “gap” she said, that can break up living in the paycheck-to-paycheck cycle and create “wiggle room.”
Sell What You Don’t Need
Justin also urged, “If you’re in the paycheck-to-paycheck cycle, sell things that don’t bring joy into your life because it can help you build a small buffer.”
They’ve used sites like Mercari, Poshmark, Facebook Marketplace and more. “Getting rid of things that don’t serve you and don’t bring you joy anymore can help push you towards financial goals down the road.”
Share Where You Are
Haley also found that letting people in on the journey that you’re on is huge because friends and family can shift their behaviors and expectations of you and support you on your path to financial freedom.
“Then the choices that you make around other people, whether it’s friends or family, might start to shift and you won’t feel bad about, instead of going to the mall and going shopping with that one friend, going to the park and having a picnic or something that’s lower cost or free,” she said.
Time Your Bills Better
Justin also said that sometimes the reason you’re running short on a paycheck is not that you’re overspending, but that you’ve got too many bills scheduled for that paycheck period.
“So it’s really important to maybe call some of your providers, whether that’s internet, cell phone, TV, water, trash, anything like that and get clear on when the dates are and how they go out for your paycheck structure,” he said.
Be Aware That Living Paycheck to Paycheck Can Happen at Any Income Level
Perhaps one of the most important lessons of all, Haley said, is that living paycheck to paycheck is not solely just an income problem.
“I have seen people who make a lot of money, over $400,000 per year, who live paycheck to paycheck and I’m talking over $400,000 a year. And then I’ve also seen people who are making very, very low incomes and they’re not living paycheck to paycheck.”
The more money management skills you put into practice, the better chance you have to stay ahead of the paycheck-to-paycheck cycle.
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