If you are living from paycheck to paycheck, it means money comes in just as quickly as it goes out. It is not necessarily a bad thing, but if all your money does is pay bills without leaving room for savings, emergencies, and other surprise costs, then there is no way to plan for the future.

Living paycheck to paycheck is not easy and it can be chalked up to several reasons among them low income, high expenses, poor money management, or poor spending habits and debt.

Being caught in the vicious cycle of paycheck-to-paycheck living can make it difficult to get ahead in life. It, however, does not have to be a permanent situation. Here are a few steps you can take to break free from the cycle and start thriving financially.

Review your current expenses

According to Sheba Njega, Personal Finance & Business Trainer, and Lead Coach at GoForth Strategies, you need to look at how you are spending your money and then see where to make changes. Categorize your expenses and pinpoint what is critical and what’s not.

“The first step is to look at where your money is going. Ask yourself, if push came to shove, which expenses would be important? Which category is important? What can’t I live without? What can I adjust?” says Sheba.

Work with a budget

Always work with a budget. When you budget, you notice spending habits you did not know you had. You will also stop wondering where your money went.

A budget will also ensure that you don’t spend on unnecessary items or money you don’t have. It will keep you honest and it’s the first step towards good money management habits.

Start a side hustle

If a low income is keeping you in the paycheck-to-paycheck cycle, then it’s time to start exploring ideas that you can turn into a business.

“After you’ve worked out your expenses, start thinking of what more you can do to increase your income. Start a passive income business that can help you eventually make some money. Alternatively, it could mean looking for better job opportunities that can help you get a higher income,” says Sheba.


Saving alone cannot break you out of the cycle of living from paycheck to paycheck. But it is a critical factor in one’s financial journey.

You have to start challenging your money to do more and that means investing in assets, says Sheba.

There are three reasons to invest:

  • Capital preservation
  • Income generation
  • Capital growth

Investment products under capital preservation are usually low-risk and have low returns. They aim to preserve your money in a short time, typically between one month and one year. They include fixed deposits and money market funds.

Under income generation, there are products such as government bonds that fall in the category of medium-term investments with medium risk and medium returns.

Capital growth requires one to have a long-term view of their investments. These include investment products such as shares or equities and they are usually high-risk with high returns.

Clear your debts

Living with debt is one of the biggest things that keeps people in the paycheck-to-paycheck cycle. To get out of debt, you have to stop taking on new debt. Start by paying off shorter term debts and work your way up to the longer term ones.

And when you make your budget, write down debt as one of the things that need to be paid.

Once it is fully paid, it’ll be extra money you get back that can be channelled towards savings or investments.

Live below your means

Living below your means is when you spend less than what you make. When you live below your means, you will have money left at the end of the month, you won’t live paycheck to paycheck and you won’t go into debt.

And when you make more money either through a side hustle or a salary bump, it’s still important to live below your means even when you can afford things you couldn’t afford.

It’s tempting to spend money when you’re making more of it but stay focused and stick to your budget.

Cut spending

If you’re living from paycheck to paycheck, then it’s time to look for areas in your budget where you can spend less.

This is not the time to order takeout for dinner or take cabs to work or go for random trips that will further deplete whatever little money you have.

Instead, downgrade your internet subscription, carry lunch to work, buy your groceries at the market, or pause or cut TV subscriptions. These are just temporary sacrifices that will put you in a better position in the future.

Save up for big purchases

If you are living paycheck to paycheck, you should not be making big purchases that you do not need. However much you may want them (but don’t need them), this is not the time to buy that air fryer, upgrade your television or take that vacation.

Instead, you can start a sinking fund where you set aside some money each month for future expenses.