Reasons You’re Still Living Paycheck to Paycheck


Does this scenario sound familiar to you: You have a job that provides a steady income, but somehow you’re still struggling to make ends meet and living paycheck to paycheck? At first, you think there’s only one way to break the paycheck-to-paycheck cycle: Figure out a way to give yourself a raise.

But sometimes, your income isn’t the culprit — it’s your financial habits, or lack thereof. If you don’t avoid these common pitfalls that are keeping you away from the financial solvency you so desperately seek, you’ll end up living paycheck to paycheck — no matter how big your paycheck is.

Internet shopper entering credit card information using laptop keyboard / razerbird

1. You’re Paying the Minimum on Your Debts

When you’re budgeting for the month, it can be tempting to minimize your debt payments to free up some extra cash for upcoming expenses. However, what is that money move doing to your finances in the long run? The short answer: It’s making you spend way too much money in interest payments, while also harming your credit score.

If you pay the monthly minimum on your credit card purchases, you’re likely never going to pay off what you owe in a timely manner. For example, paying the minimum 2 percent on a bill of $5,000 could cost you thousands of dollars in interest and take you more than 30 years to pay off at an assumed 18.00% APR. Not to mention, this could affect the interest rates you are offered on other loans in the future — or even prevent you from qualifying for a line of credit at all.

An attempt to improve your credit score or negotiate your interest rate down could save you money in interest payments and reduce the time it takes to pay off your debt. And paying more than the minimum balance would save you money as well and help you get out of debt faster — perhaps even by a few years.

Two friends shopping for clothes in a store / Todor Tsvetkov

2. You’re Busy Keeping Up With the Joneses

Your neighbor just bought a new sports car. An ex-college roommate just paid his down payment on a palatial four-bedroom home. And, your coworker wears designer clothes to the office every day.

It’s easy to see others living an extravagant lifestyle and want the same luxuries for yourself. However, that doesn’t mean you should live like you’re rich before you have the money to back it up.

No matter how successful you are, and how much money you have to show for it, there will always be someone out there who has a newer gadget, a more tricked-out ride or a slightly bigger house. That’s life. Trying to keep up with the Joneses will only hurt your bank account later on, when you can’t make the auto loan payments for the new sports car you have sitting at the curb.

Instead of trying to keep up with the Joneses — or the Kardashians, for that matter — learn how to live rich on a budget.

Stressed Driver Sitting At Roadside After Traffic Accident / monkeybusinessimages

3. You Fail to Plan for Irregular Expenses

Are you budgeting throughout the year for birthday gifts, potential car maintenance costs, biannual auto insurance expenses or any other bill that doesn’t creep up monthly? If you’re not planning for these irregular expenses, you’re likely digging yourself into a bigger hole than you realize.

Matt Becker, founder of fee-only financial planning practice Mom and Dad Money, said these expenses can disrupt even the most robust budget if not taken into account.

“The mistake I see all the time is failing to plan for irregular expenses,” he said. “That includes not only the bad stuff like car repairs and home maintenance, but fun things like travel and gifts. You should regularly be putting money away for these kinds of expected but irregular expenses so that when they happen, you’re not left scrambling to find the money and they don’t blow a hole in your budget.”

Even if it means adjusting your budget to make room for these expenses, by either saving more or dedicating a portion of your savings to these costs, it’ll help you maintain your financial footing each month.

woman handing over cash to man / RyanJLane

4. You Fail to Plan. Period.

Do you have a budget to begin with? Have you calculated how much money you can allot to food, housing, transportation and personal expenses while still managing to save up a college or emergency fund? If you don’t have a financial plan, you really have no way to build up your wealth or make sure you stay out of debt.

“Everything from going over budget to paying a subscription fee for the free trial you forgot to cancel is the result of a failure to plan,” said Stefanie O’Connell, freelance writer and founder of The Broke and Beautiful Life. “Whether it’s planning for retirement or planning to brown bag your lunch for work tomorrow, planning can empower you and your finances.”

It’s one thing to set up a reasonable budget, but if you have no system in place to stick to it, you’re doomed to fail. It’s important to ask yourself what your budget translates to — e.g., $70 per month budgeted for nights out translates to seven cocktails per month at an average of $10 each, or roughly two cocktails per week. Converting dollars into items can help you keep track of what you can afford and what you simply can’t stretch your budget for.

In her book, “Say Goodbye to Survival Mode,” Crystal Paine writes that, while difficult to create, a budget can be your key to a worry-free financial future:

“Here’s the beautiful thing about a budget: while it’s hard and limiting at first, over time you’ll realize that it’s your means to enjoy life without headaches and worry. Ultimately, it’s a pathway to freedom. And when you tell your money how to work for you, you can be intentional about how you use it.”

According to Kendal Perez, blogger for Hassle-Free Savings, even planning ahead for your ATM withdrawals can save you a lot of cash over time.

“Withdrawing cash all the time from ATM stations that aren’t affiliated with your bank is eating into your income,” she said. “Avoid this expense by withdrawing cash at the beginning of the month or getting extra cash at checkout when you’re out shopping.”

Plumber using a wrench to tighten a siphon under a sink / lovro77

5. You Don’t Realize How Handy You Are — or Can Be

Appliances go on the fritz, things break and get old, and many people call handymen to repair items in their homes regularly. However, in today’s digital age, how-to videos and tutorials are available on nearly every topic you could imagine — and handyman costs aren’t cheap, averaging about $390, according to HomeAdvisor.

“People mistakenly believe that all repairs require hiring a professional to do the job, or worse, that it’s easier or cheaper to buy new stuff when they break,” said Jody Lamb, a public relations pro who’s worked with “Today, there are expertly produced how-to websites and videos available online that make it easy for novice and inexperienced do-it-yourselfers to fix stuff on their own and extend the life of their appliances and equipment.”

So instead of blowing most — or all — of your paycheck on the next repair, see if you can do the task yourself.

family shopping in mall / Cathy Yeulet

6. You Spend Impulsively

You decide to go to the mall to window shop, see something you like and immediately purchase it without looking around for a more affordable alternative, or for a discount code or coupon. Granted, couponing can get extreme, and shopping around can eventually eat away at your savings if you’re spending more on gas than the amount of cash you could potentially save. However, buying items on the spot or because you’re emotional can make living paycheck to paycheck inevitable.

Patience is a virtue of the wallet, as most retail companies put almost every item they carry on sale eventually. It might be last season’s style, but the savings could be huge if you wait on those seemingly must-have purchases. In fact, you might even realize that you don’t really need or want that item in the first place.

According to author and small-business coach Julia Kline, a wish list can help consumers reduce their spending and make their paychecks stretch for the items they truly want.

“I often have clients who thought they couldn’t afford a new TV, but by simply curtailing their impulsive, unnecessary spending for a month, they found that they had plenty of money for the TV after all,” she said. “And they were more than happy to sacrifice the extra tube of lipstick, the fancy sunglasses and the expensive carry-out in order to make it happen.”

Watch: How to Save If You Live Paycheck to Paycheck 

Group of people exercising on exercise machine in a gym. / BraunS

7. You’re Still Paying for Your Unused Memberships

Your unused memberships to fitness centers, clubs and organizations can put a sizable dent in your monthly income. This is a potential pitfall of signing up for automatic payments, as it’s easy to lose track of where your money is going and if the amount charged has changed.

It’s wise to evaluate the subscriptions you have and conduct a cost-benefit analysis to determine whether you should maintain that Netflix account or 24 Hour Fitness membership. Trim the fat in terms of your subscriptions to the TIME Magazines you never read or the Amazon Prime membership you’re not using, and free up some cash to pay down debt or finance unexpected expenses.

girl looking over a document / Onzeg

8. You Avoid Your Bank Account and Credit Card Statements

The worst thing you can do is deny the reality of your financial situation. Many people avoid looking at their bank account and credit card statements out of sheer fear. This is only a disservice, as you can’t tackle your financial situation or properly budget if you don’t know how you’re faring with your money.

There are additional risks associated with not checking your statements regularly: You could be charged for expenses you did not incur, letting your accounts remain compromised without your knowledge.

Looking through your credit card statements can help you see if you’re spending more than you earn, as can reviewing your checking account balance to make sure that all of your paychecks are deposited properly and that you’re remaining in the black. Checking up on your statements can also help you adjust your budget to be more realistic to your expenses.

Hands of businessman examining financial report / mediaphotos

9. You Fail to Think Like an Investor

Rather than just budgeting for needs and wants, an investor would take as much money as possible and invest it in his financial future, making his money work for him. It’s easy to let your money sit idle in a low-interest savings account — but what would an investor do?

You’ve probably heard of the stock market, money market accounts, retirement accounts and laddered certificates of deposit, but are you actively using these products and investments to grow your wealth? Saving for your future by putting some money away in a mutual fund can help create financial stability for yourself long term, while simultaneously helping you curb some bad money habits you encounter when you view your income as entirely yours to use in the here and now.

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These responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

  • Jamison

    Pretty much don’t be stupid. Clearly, there are at least 10 ways people are making bad financial decisions. All of which are easy to overcome with dedication and will power. Find it within yourself and feel the glory of financial freedom.

  • This are all good reasons if we assume that people earn a decent wage. Unfortunately at the moment many simply don’t earn enough to meet the minimum costs of living. This is a ’cause’ I suppose.

    • Avery

      I make 7.25 an hour and I’m not complaining. I pay my insurance, car payment, gas, clothing, food, automotive repairs, haircut, cellphone bill and rent. I work 50 hours a week. This coming year I’ll be going back to school. I’ll get my schedule Changed and I’ll be good to go. It’s people like you who give excuses to my generation and allow them to be lazy.

      • Madeline

        No need to be self-righteous.

  • I agree it’s easy to spend money on the little things that add up quickly. I find it easier to use cards and budget electronically. For me, cash is very easy to spend and lose track of where it all goes. A credit card comes with strings and I tend to think harder when I have to pay for something twice (with the card, then my bank account).

  • Chatham Hale Forbes Sr.

    Quite aside from the personal factors listed is the well established fact that 98% of the American population earns far too little money in this economy to budget rationally. The savings rate is far too low, the paychecks are far too low, and this has been true for well over a decade. Check the archived columns of Paul Krugman or Robert Reich for professional explanation of these sorrowful facts. Check the frequent speeches of Senator Elizabeth Warren, a Harvard law professor, and Senator Bernie Sanders also, for similar explanations. The prudent management discussed in this article is valuable guidance, but the truth about long-term flat income and income inequality in our country has to be given precedence over all else. If you don’t have enough income, and no prospect of acquiring a decent one, then all the good practices in the world can’t improve your financial position significantly.

  • Anthony The Mastermind

    none of those apply to me. it depends on your salary and payments. for example one person lives in a house and has a big income. lets say 60,000. it can work for some people.

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