As of 2025, more than 57% of American adults say they are living paycheck to paycheck, according to MarketWatch Guides (1). And persistent inflation certainly isn’t helping matters in that regard.
Living paycheck to paycheck can be extremely stressful and if you find yourself in this situation, you may find yourself with zero financial cushion. Here, any unplanned expense could throw you for a loop and force you to rack up hundreds or even thousands in debt.
Imagine the example of Laura, 49, who finds herself in this exact situation following a divorce, despite all her education and hardworking mindset.
But Laura doesn’t have to resign herself to that cycle forever. Here are steps she and anyone who finds themselves in a similar situation can take to set themselves up for a more financially-stable future.
Budgeting may not be the most exciting activity you’ll do in your lifetime, but it could be one of the more valuable ones.
A budget can help you track your monthly expenses and see exactly where your money goes on a regular basis. That could, in turn, help you identify expenses you can cut to build some savings and stop counting down the days to that next paycheck.
A 2019 CFP Board survey found that 40% of Americans have never had a budget and 59% are not tracking their spending (2).
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If you’re new to budgeting, one easy way to go about it is to sign up for a budgeting app.
You can also go old school and write down your budget on paper, or create a spreadsheet on your laptop. It doesn’t matter how you budget as long as you find a method that works for you and that you can commit to updating.
The Federal Reserve’s most recent findings highlight an alarming trend in the context of savings: A good 37% of U.S. adults don’t have the cash reserves to cover an unplanned $400 expense (3).
If you’re in a similar situation, you should know that the only way to break the paycheck-to-paycheck cycle is to build up some savings. That way, you won’t necessarily be reliant on your upcoming paycheck to cover your near-term bills.
Once you get yourself onto a budget, you can identify costs to potentially cut back on such as subscriptions you don’t need or streaming services you don’t use. But unless you’re willing to make more drastic changes, like downsizing your home or giving up a car, your emergency fund (which should, ideally, cover three to six months of living expenses) may be slow going.
So instead of just relying on reduced spending to build savings, consider getting a side hustle. Side Hustle Nation says that 39% of working Americans report having a side hustle (4). Among millennials, that figure rises to 50%.
It’s hard to stop living paycheck to paycheck when you have debt hanging over your head, monopolizing your income. The average U.S. household with credit card debt has a balance of around $6,065, reports the Federal Reserve (5). But if you have a similar level of debt, you may be throwing money away on interest regularly.
Once you’re able to reduce your spending and boost your income with a side job, work on paying down debt after completing your emergency fund or getting it to a good place. One option is to tackle your credit card balance with the highest interest rate first — known as the avalanche method — and then work your way down.
You could also look at consolidating your credit card debt into a personal loan, which could mean paying less interest. Or, consider a balance transfer to a 0% introductory rate credit card if you qualify for a good offer and the fees aren’t too high.
According to an Allianz Life’s 2025 Retirement study, nearly half of Americans surveyed do not have a written financial plan (6). Furthermore, a 2020 report by the National Institute on Retirement Security found that 40% of older Americans have only Social Security for retirement income.
If you think it stinks to live paycheck to paycheck during your working years, imagine having to live Social Security check to Social Security check when you’re much older.
To avoid that fate, start planning for a more secure future once your near-term finances get to a better place — meaning, you have a fully loaded emergency fund and your debt (other than long-term debt, like a mortgage) is whittled down. You can begin by allocating a small amount of money to an employer 401(k) or IRA.
If you’re going to do the IRA, you may want to choose one that allows for automatic transfers (which many do). That way, you can set up a recurring monthly contribution to your retirement account without having to worry about moving funds over on a regular basis.
With this combination of strategies, and a willingness to make some changes, you should be on your way to break out of the paycheck-to-paycheck trap.
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MarketWatch Guides (1); CFP Board (2); The Federal Reserve System (3); Side Hustle Nation (4); Federal Reserve Bank of St. Louis (5); Allianz Life (6); National Institute on Retirement Security (7)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
