How to Stop the Paycheck to Paycheck Cycle

June 25, 2019

How to Stop the Paycheck to Paycheck Cycle

“You don’t have to see the whole staircase, just take the first step.” Martin Luther King, Jr.

Are you so overwhelmed by your financial situation that it’s unclear what your first step towards cleaning it up should be?

Have you attempted to work on your finances in the past but hit a roadblock and now you’re back where you started (or worse off than you were before)?

Are you stuck in the paycheck to paycheck cycle, and you just don’t see how it’s possible to get out?

If you said “yes,” nodded your head, or cried 😭 at any of the above questions, I hear you.

And I can relate.

Taking the first step to end the paycheck to paycheck cycle

One of my regrets with my journey to debt-freedom is that it could have happened a lot sooner. I wasted a lot of time doing NOTHING about my situation. Had I chosen to just start, I probably would have become debt-free waaaay earlier than I did.

But the thing is, it’s hard to “just start” when you’re overwhelmed, scared, or have no clue where to begin.

If that’s where you are today, I want to help.

I want to help you figure out your first step towards breaking the paycheck to paycheck cycle. And more importantly, I want to help you take it.

Your financial journey is unique

No two financial journeys are exactly the same. And for that reason, your first step to ending the paycheck to paycheck cycle may be different than your best friend’s, and it may be different than mine was. That being said, there are universal principles to managing money, and naturally, there are some common starting points.

So, depending on where you are with your finances, there are multiple “first-steps” you could take.

As I detail the various moves you can make to begin breaking the paycheck to paycheck cycle, I encourage you to reflect not only on the current state of your finances but also on what is likely to motivate you and excite you to keep going down the path of healthy money management. (Yes, it is possible to get excited about managing your money!)

Your personality, habits, and preferences come into play here, and since no one knows you better than you, you have the best idea which “first step” is going to give you energy and make you want to continue moving forward.

Just to be clear, this is not a license to hold onto familiar but damaging money habits; that’s not what I’m saying here. Change is on the menu for sure, but to get started, we’re going to work with who you are today. 🙂

Possible first steps to breaking the paycheck to paycheck cycle

Read through these potential “first steps” to see what is the best starting point for you. With each step, I’ll describe who might benefit the most from making that move.

1. Get organized

How’s your organizational system? Do you have one? Where is it? If the answers to those questions are “My what?” “Kinda sorta,” and “Somewhere…” then it’s time to get organized.

Creating an organizational system (and keeping up with it, of course) will give you a sense of order regarding your situation and will set you up to start taking control of your money with confidence.

It doesn’t matter if you organize your bills and financial documents in a physical filing system or an electronic one. The goal is to arrange things in a way that works for you. Your system has to be simple enough and clear enough that you will follow it.

Be sure to identify when you will maintain your organizational system.

>>> Who this step is best for

If you feel overwhelmed with physical clutter and energized by order, then start here. For example, if a messy desk, room, or home affect your ability to think and work efficiently, but when cleaned up and organized, those same spaces invigorate you, this is THE first step for you!

2. Track your spending

On average, how much do you spend on groceries each month? How about on gas for your car? If you have no clue, then I recommend you start tracking your expenses.

Doing this may terrify you, because, well, it is scary to “discover” that you spend too much on eating out or that your online shopping habit is making you broke. (And by “discover,” I mean confirm what you’ve been suspecting for a while now.)

But I’ve got good news for you: to track your spending you don’t even have to change your habits — yet. All you’re doing for now is documenting your spending. The goal here is to find out where your money is going.

But here’s what’s likely to happen once you do start tracking: you will begin spending a little differently. You’ll suddenly have an awareness of where your money is going, and that act in itself introduces a beautiful thing called…ACCOUNTABILITY!

You can track your expenses by saving your receipts, jotting down your spending in a small notebook, or by going through your credit card and bank statements. Be sure to track your spending daily. Then each week, and eventually every month, add up your expenses by category. Bonus points if you use cash while tracking your spending!

>>> Who this first step is best for

If you’re living the paycheck to paycheck cycle but “on paper” you have enough money to cover your expenses, if you really have no idea where your money is going, or if you KNOW you overspend every month. Or all of the above. Or if you’re absolutely scared terrified to do this step. 😬

3. Identify your money mindset

You may or may not be familiar with the term money mindset. Your money mindset dictates your thoughts and perceptions of money, your money values, and most importantly, your money habits. And your money habits, of course, determine the state of your finances.

Your money mindset is formed in part by your upbringing (what was modeled for you and the attitude around money in your home growing up), your own experience and interactions with money, and the money influences around you currently.

Your money mindset could be the very reason you spend money the minute you get it, you like to treat others to gifts and other things when you know you can’t afford it, or why you’re afraid to part with money even if you have plenty of it.

For example, a scarcity money mindset could cause you to be so frugal with your money that you can’t bring yourself to spend it on legitimate needs. Likewise, the same mindset can cause you to overbuy items out of fear you’ll run out. Or it can cause you to feel envious when a friend is doing well financially because subconsciously you believe that resources, including success, are limited — therefore their success takes away from your chances of success.

The same mindset can manifest itself differently depending on the individual.

Identifying your money mindset will shed some light on the reasons you do what you do and think the way you think when it comes to money.

>>> Who this first step is best for

If you find yourself repeating the same behaviors even when you know they’re unhealthy, start here. For example, offering to take a friend out to eat, when you know you can’t afford it can signal a deep-rooted money belief that you need to project that you are doing better than you are in reality. Being able to identify the reason behind some of your actions will help you identify and curtail your most damaging habits.

4. Have a dream session with your spouse

You probably have already heard that one of the leading causes of divorce is financial stress. If you are married, then you and your spouse likely have experienced some source of money-related discord in your relationship.

I may not know the specific financial issues that you face, but I do know what it’s like for financial stress to creep into a relationship. I know what it’s like for that financial stress to lead to dishonesty, resentment, and frustration. Again, I don’t know you personally, but I do want to help you fight for your marriage. I want to help you end — or prevent — financial stress from ruining your relationship with your spouse.

If you’re married and are struggling financially, getting on the same page with your spouse has the power to transform your finances AND your marriage. Why? How? Because it will open up communication and remind you that you’re on the same team — something that admittingly, is easy to forget in marriage at times.

Seeing eye-to-eye and working together with your spouse on your finances is essential if you want to make any progress. Otherwise one of you will make efforts to clean things up while the other is unintentionally (or in some cases, intentionally) destroying those efforts.

So, have a dream session with your spouse. I encourage you and your partner to check your calendars and find a time that you’re both relaxed and mentally available. (You don’t want to start talking about your finances if you’re rushed or stressed out about something else.)

At this meeting, discuss your financial dreams. Make sure you touch on yours, your spouse’s, and your shared dreams. It’s vital and healthy to give airtime to your individual dreams and desires. Maybe you want to go on international missions trips, and your spouse wants to play in a band. Those personal dreams will need to be supported (and funded) and worked towards by both of you.

>>> Who this first step is best for

Well, married folks, for one. But especially those couples who fight about money or in which one spouse handles the finances and the other one, for the most part, is not involved.

5. Add up your total debt

Okay, this is a big one, not so much because it’s complicated, but because it’s a hard thing to face — kind of like tracking your spending. Even if you’re not at a place to tackle it, adding up your total debt will give you a starting place. You may know you have some student loan debt, but you’re not quite sure how much, or you have 11 credit cards but don’t know how much total credit card debt you have.

This also helps if you compartmentalize your debt. For example, some people say they have X amount of debt plus a car payment or plus student loans. Those are debts too!

So, go through all your account statements and add up the payoff amounts or total balances due for your debts. (Make sure you’re looking at the total amount due, not the monthly payments.)

This is another scary step, but a necessary one. Even if you know you have a lot of debt, it’s crucial to know just how a lot. 😉

>>> Who this first step is best for

Start here if becoming debt-free is your primary goal, if your debt is overwhelming to the point that you avoid it, or if it sometimes feels like you’re NEVER going to be able to pay off your debt.

(Note: if you think this is your first step, but your bills aren’t organized yet, then I recommend starting there first and then coming back to this step. It will make things way easier!!)

Take action. Break the paycheck to paycheck cycle — for good

Any one of these five “first steps” — getting organized, tracking your spending, identifying your money mindset, having a dream session with your spouse, or adding up your total debt — will be a great place to start putting an end to the paycheck to paycheck cycle.

Again, since no two financial journeys are the same, I encourage you to reflect on what aspect of your financial situation causes you the most stress and identify which first step will address it. If you and your spouse fight daily about money, then having a dream session is your first step. If you overdraw your checking account every month, you need to start tracking your spending.

Once you’ve figured out what your first step is, the most important part comes next: TAKING it! Because after all, knowledge without action is useless.

So if you’re able to, stop reading this and get started on your first step! If you’re not able to do it right now, look at your calendar and decide when you’re going to start. Find the time and make an appointment with yourself (and spouse, if applicable).

Marking out time on your calendar may seem silly, but it will be helpful. Life is busy. You’re busy, I’m busy, and there will always be something else to do. So prioritize your journey of breaking the paycheck to paycheck cycle by committing to take action right away.

This is pretty bold of me to say, but I guarantee that you will feel better about your situation after just starting somewhere. Identify that first step and take it.

Because after all, you don’t need to see the whole staircase to take your first step. 🙂

Have you identified what your first step towards breaking the paycheck to paycheck cycle should be? I’d love to hear what it is and when you plan to take it. Share in the comments section!

Are you stuck in the paycheck to paycheck cycle and don\'t see a way out? These tips will help you identify your best \