6 common mistakes to avoid when trying to stop living paycheck-to-paycheck

It's possible to get ahead of the bills, save money, and say goodbye to the paycheck-to-paycheck lifestyle. If you're here, it probably means you're already on your way, or at least motivated to begin the journey. 

Here are some of the biggest mistakes that could hold you back from reaching your goals. 

Mistake #1: You don't have a budget

It's hard to stop the paycheck-to-paycheck routine without a budget. What is a personal budget? It's your plan for how you spend your money. You get to decide which things are most important to you, and direct your dollars to them.

To make a budget, you add up your income on one side and your expenses on the other. The goal is to have more money come in than go out. 

If you've tried to make a budget in the past but struggled, there's an app for that. The Achieve MoLO app helps you track expenses and make smarter spending decisions so you have more money left over each month. The app is 100% free, with no ads. 

Using a budget is a great way to understand where your money goes and what changes you might want to make. Budgeting gets easier over time.

Mistake #2: You live above your means

When you live below your means, you make a conscious decision to spend less money than you have. It doesn't mean you can't have fun or enjoy life, or that you never spend any money at all. It's actually the opposite. 

When you live below your means, you prioritize what matters and use those priorities to make spending decisions.  

Here are a few tips to live below your means when you also live paycheck-to-paycheck. 

• Learn how to make a budget if you haven't yet.

• Review each expense in your budget and ask yourself if it's essential.

• Keep a spending log and note what you spent, what you bought, and how you felt.

• Consider using cash only for a while, especially if you’re sometimes unsure of where all your money went. If using cash isn’t an option, use a debit card only.

When you reframe your mindset around money, it's easier to realize what your goals are and get excited about them. 

Mistake #3: No emergency fund

An emergency fund is your financial life preserver. If you need money for an unexpected expense, your emergency fund is there to help so you don't have to charge it to a credit card or get an expensive loan. 

You might wonder how you can build an emergency fund when you live paycheck-to-paycheck. The answer is that you do it slowly, and a little bit at a time.  

Let's go back to your budget. Can you find $5 to save each payday? $10? More?

You don't have to shoot for the stars if you don't have a lot of extra money in your budget to work with right now. Instead, you save what you can and you do it consistently.

Automatic transfers could help. You can open a savings account and set up a transfer each payday. Your money grows automatically, and it feels great to see the balance move up. 

Mistake #4: You continue to use credit

Credit cards are convenient, and it's easy to rely on them (especially when inflation makes basic necessities more expensive). 

It's hard to do, but you have to stop using your cards if you want to get out of the paycheck-to-paycheck routine. Why? Because you may add to your debt if you don't pay your balances in full each month. 

A few simple steps could help you set yourself up for success. Delete your credit card numbers from the websites where you shop, and put the physical cards out of reach. This forces you to slow down before you use the cards, giving you time to reconsider. Cut up the physical cards or put them away somewhere safe so you’re not tempted to use them. You don't have to close the accounts, but consider doing so if you’re unable to resist using them. 

Mistake #5: No debt payoff plan

Debt could be an obstacle as you work your way out of the paycheck-to-paycheck habit, but it doesn't have to be.  

There are so many ways to approach and manage debt. You just have to find the one that works for you. 

The possibilities might include:

• Debt snowball

• Debt avalanche

• Debt resolution

• Debt consolidation loan

• Debt management plan

• Bankruptcy

One isn't better than another. They're different solutions suited to different situations. What matters is that you have a plan to tackle debt and commit to it. 

Mistake #6: You assume you have to do it alone

Sometimes it takes a village. There are people who could help you figure things out if you feel overwhelmed or you experience debt shame.  

A debt expert could help you understand whether you’re a candidate for a new loan or for debt resolution. Get a free debt evaluation today. And don’t be afraid to talk to multiple experts. Credit counselors could help you with your budget, and a bankruptcy attorney could help you understand your legal options.

The bottom line is that it's a relief to know you have options and that the paycheck-to-paycheck life doesn't have to be permanent. While it might take time, you could shape the financial future that you want to have.