Personal Finance

Tips to Stop Living Paycheck to Paycheck

5 min read
Jul 31, 2023

There’s a good chance that you, or someone you know, is living paycheck to paycheck each month.  

According to MetLife's 21st Annual U.S. Employee Benefit Trends Study, 55% of workers report living paycheck to paycheck, up from 43% in 2022.1 The study also reveals the percentage of workers with a three-month savings cushion has decreased from 62% in 2022 to 52% in 2023. These figures shed light on the financial strain many workers face, making it difficult for them to save for the future.  

A combination of factors — such as increases in the cost of living, inflation, and medical bills — can make it challenging to make ends meet. Economic downturns and underemployment can also contribute to this financial challenge.  

While you may be able to cover day-to-day expenses, living paycheck to paycheck can impede your ability to handle unexpected emergencies, save for the things you want, and retire with a comfortable nest egg.  

What does living paycheck to paycheck mean?  

The phrase “living paycheck to paycheck” refers to having little to no money available for savings after covering bills and essential expenses. This can occur when income and expenses align closely, leaving minimal room for financial flexibility. People living paycheck to paycheck may struggle to meet basic living expenses if they were to suddenly stop receiving a paycheck. 

It’s important to note that the circumstances leading to living paycheck to paycheck can vary widely, and income alone is not always an indicator. Even individuals with a substantial income can find themselves in this situation, especially if they live in a region with a high cost of living or if they face extensive medical bills. In fact, data reveals that 60% of millennials earning over $100,000 a year report living paycheck to paycheck.2

So how do you change your financial circumstances when it feels like it’s of out of your control? These steps can help you gain a financial foothold and create a safety net for the future.  

5 ways to help save money if you’re living paycheck to paycheck

1. Understand your cash flow and relationship with money 

To initiate change, it’s essential to understand your cash flow — how much money is coming in and going out each month. Before devising a plan to help stop living paycheck to paycheck, consider the following questions:

  • Am I spending money on what's important to me?
  • Are my current purchases making me happy, or do I regret them?
  • How can I reduce my expenses — are there cheaper alternatives available?

2. Cut expenses that don't serve you

Once you have a clear picture of your cash flow and have asked yourself those critical questions, you can identify costs that can be reduced or eliminated entirely. While it’s not necessary to give up everything you love, it’s important to recognize and eliminate expenses that hold little value in your life and aren’t helping your budget

Take a closer look at your routine spending habits:

Consider your daily routine. Are there things you buy out of habit, rather than necessity or a true desire? Could you dine out for breakfast vs. dinner? Could you make your lunch at home? Could you make your own coffee drinks? 

Evaluate your subscription services. Are you truly using all those streaming platforms? Cut any services you no longer use or enjoy.

Do some research to see if other providers or businesses offer similar services at a lower cost. For example, can you find a lower-cost gym that still has the amenities you need? 

3. Boost your income

Cutting costs and managing expenses3 are crucial steps to breaking free from the paycheck-to-paycheck cycle. However, it’s equally important to increase your income while reducing expenses. Consider the following strategies to generate more money:

Look for ways to increase your take-home pay, such as taking on additional hours or moving to a position with higher compensation.

Monetize your existing hobbies or skills, such as teaching, playing music, or writing. You could also consider part-time jobs that align with your interests, such as working at your favorite coffee shop or doing landscaping or handyman work for neighbors.

Earn extra income in your spare time by joining the gig economy. Consider project-based work, freelance opportunities, and part-time employment.

4. Tackle your debt

When you can’t pay for necessities, you may have to use credit cards to cover expenses. Using a credit card is a viable option, as long as you can make the monthly payments. But remember, if you fall behind in your payments, credit card or other types of debt can make it even harder to save money long term.

To reduce or pay off your debt, try using a debt reduction strategy such as:

Debt avalanche method: Pay off debts with the highest interest rates first, while making minimum payments on your other debts. This method helps reduce the overall amount of interest you have to pay.4

Debt snowball method: Pay off debt with the lowest balance first, while making the minimum payment on your other debts. This method aims to keep you motivated by achieving quick wins until all debts are paid off.5

Consider other ways to pay down debt, such as refinancing at a lower interest rate or using a debt consolidation loan. You can also look into loan assistance programs to help you manage it.

5. Make the most of your extra cash

Once you start accumulating extra money each month, strategize how to use that surplus effectively. Consider the following tactics:

  • Build an emergency fund to handle unexpected expenses. Aim to have three to six months' worth of expenses in a liquid savings account.
  • Invest in your future by contributing to retirement accounts, such as 401(k) plans and/or individual retirement accounts (IRAs).
  • Maximize your savings with bank accounts that offer high annual percentage yields (APYs), such as a high-yield savings account, certificate of deposit (CD), or a money market account. These accounts allow you to earn interest on your liquid cash savings.

By implementing these strategies, you can gradually improve your financial situation, achieve greater stability, and start focusing on what's most important to you.

Future-proof your finances

Learn more about UpwiseTM, a free app from MetLife that helps you create better financial habits so you can feel more confident abot your future.

1 “MetLife’s 21st Annual U.S. Employee Benefit Trends Study 2023” MetLife, 2023 


3 When referencing money management, we mean leveraging tools to help individuals with things like budgeting, saving, bill negotiation, etc.

4 “What Is the Debt Avalanche?”, 2023 

5 “How to Use the Debt Snowball Method”, 2023 

Upwise is a product of MetLife Consumer Services, Inc. Upwise is available at no cost to all individuals and regardless of any MetLife relationship or product. Upwise is for educational purposes. Each individual is advised to consult with their own attorney, accountant, and financial professional regarding their specific circumstances.  MetLife does not provide legal, tax, or investment recommendations or advice.