Are You REALLY Living Paycheck to Paycheck or Living Outside of Your Means

Today we have a post from an up and coming freelance writer named Ashley.  While I did not write this post, I agree with it’s contents, sometimes looking at things from the point of view “Keep It Simple” is the way to go.  Take it away Ashley!

If you were to take a survey of the average American household, you’d find that more than half of those families claim to be living paycheck to paycheck. This essentially means that they have no excess funds and everything they earn goes to a bill or necessary expense. While this is true in some households, in others it may be not be the honest truth. Many individuals live beyond their means and as such end up in a horrible cycle of debt. So I ask, are you REALLY living paycheck to paycheck, or could you simply be living beyond your means?

How does one determine whether or not they’re living beyond their means or sincerely leaving from paycheck to paycheck? Simple… it requires an in depth financial assessment. You don’t need to hire an accountant or financial advisor to assist you. With a bit of research and fact checking, you can quickly determine whether you need to bring in additional income, or cut back on the way you’re spending money. Here are a few tips:

  1. Tally All Your Income – the first step in this process is to get an accurate account of your household income. Tally up all the money you have coming into the house each month. This would include things like your paycheck, any child or spousal support you receive, and additional income from other sources.
  2. Tally Up Your Necessities – once you know exactly what you have coming in you can then tally up how much you spend on necessities. No, your daily coffee run does not count as a necessity no matter how much you think you need coffee to operate. Necessities would include things like your mortgage/rent, car and property insurance, utilities, and groceries.
  3. Tally Up Your Debts – now get a real picture of the debts you incur on the monthly basis. Are you paying for a car loan, student loan, or credit card? These debts need to be factored so that you can get a good idea of what expenses you do have.
  4. Do the Math – Now taking your total out of pocket expenses for your necessities and debts, subtract that amount from your income each month. What do you have left? If you have a decent amount of money left over, then your cash is being spent in other areas like entertainment. If you have nothing left over, then you truly are living paycheck to paycheck.
  5. Come Up with a Plan – After getting a clear picture of where your money is going you need to come up with a plan on how to get more use out of your cash. Start by assessing your necessities, are there things you could do to save money? This might include things like refinancing the mortgage, or even switching energy providers. Information from Just Energy Alberta, which serves 1.8 million customers across Canada and the U.S., can help you learn more about new natural gas and electricity plans. If you can’t find ways to save on necessities, you’ll need to look at your excess expenditures such as eating out, or paying for entertainment.
  6. Create a Budget – After figuring out where your money is going and how to cut costs where you can, the next thing you want to do is create a budget. By creating a budget you can ensure that your money is stretching as far as it can. It will also allow you to see when you go over budget so you can make necessary adjustments.

That’s pretty much all there is to it. After following the above tips, you may find that you do have enough income to sustain a decent lifestyle. Proper financial management is really about having self control and being financially aware of your spending habits. If you do however, find that your expenses exceed your income you may want to look into other ways to earn passive income to help close the financial gap.



If you are looking at your finances wondering if you are living paycheck to paycheck, it’s time to see what’s around you today so you can change your tomorrow. Getting the big picture all in one place with Personal Capital has really helped me see what I can do with my finances today and in the future. Take control of your financial life and you will have more time to enjoy what matters to you most.  If you’re looking for a great way to track your budget, net worth, analyze your portfolio fees, manage your cash flow, and get a handle on your finances for today and the future, sign up with Personal Capital today.

6 Responses to “Are You REALLY Living Paycheck to Paycheck or Living Outside of Your Means

  • You’re exactly right. If we dont ask the right question how can we get the right answer?

    Many people feel stuck because they are living P2P. But living P2P is (often times) just a symptom of the problem. The real problem goes back to living beyong your means.
    Luke Fitzgerald @ FinanciallyFitz recently posted…Tuesday’s Long Read! Plus, New Feature on FinanciallyFitz…My Profile

    • EvenStevenMoney
      1 year ago

      Sorry for the late response. Living below your means can be the answer to many of the problems that we all face with purchases, I agree.

  • Doing the math and adding up all your income and expenses is such an important step in personal finance. By doing this one thing I strongly believe people will start to see a dramatic improvement in their cash flow. It is impossible to save money if you don’t know where any of it is going.
    Mrs. Budgets @MrandMrsBudgets recently posted…Upper Back Pain ReliefMy Profile

    • EvenStevenMoney
      1 year ago

      Sorry for the late response. It seems so simple, but it’s the honest truth, just knowing what is coming in and what is going out is such a big step.

  • I would say that we live paycheck to paycheck, but part of that is because all of the extra income goes to pay off debts and/or bills. So I pay extra money to pay down my student loans and/or other debt. Because of that we do live paycheck to paycheck. That doesn’t give us much wiggle room, but if I needed I can carve out some space to give us breathing room if necessary.
    Jason recently posted…Pay No Attention to the Doomsday Stock Market HeadlinesMy Profile

    • EvenStevenMoney
      1 year ago

      It’s a a sacrifice I have made as well, it’s a small risk to really pay down those student loans. My only suggestion would be to have that emergency fund of some sort just to avoid the little bumps along the way, the really big bumps those are different. As always I’m rooting for you Jason!

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