In a recent article, MarketWatch wrote that 56% of Americans reported living paycheck to paycheck, with 48% also reporting that they had suffered an unexpected financial setback in the past three months.
That’s scary! It’s no wonder people living paycheck to paycheck with no savings to fall back on say they feel stressed and worried about their financial prospects.
What’s even worse is that our society often normalizes this way of living and actively tries to keep us in this cycle. We’re offered more and more credit cards that keep us afloat in the short term, but eventually lead to stacks of debt that we just can’t pay down.
The emotional and physical stress is all too real and it can be debilitating.
BUT… what we also know is that no one has to be resigned to living in this hamster wheel of fear and worry. It IS possible to break the cycle of living paycheck to paycheck by creating a one-month cushion. That way, you can pay bills on their due dates, and not have to wait until you get your next paycheck.
We’ve got some great resources that can help you on that journey, But in this post, we wanted to share a few brief stories and quotes from Goodbudgeters who’ve gotten out of the paycheck to paycheck cycle so you can see what’s possible and be inspired on your own journey.
“We were renting and living payday to payday (and not even making it a lot of the time!). We tried a few budgeting programs, but they were either overwhelming or focused on monthly cash flow. Monthly was no good for us, we couldn’t even make it two weeks!
Goodbudget (EEBA back when we started) introduced us to ‘envelope budgeting’ and literally changed our lives. We were able to save for a trip to India and then for our own home. We even saved enough to cover the cost of fertility treatment. We cannot thank Goodbudget (and the people behind it) enough.”
“My wife and I had tried the envelope system with cash, but it was difficult because we couldn’t both have the envelopes with us, and how do you get the exact change for each envelope from an ATM, and what do you do with loose change? So we abandoned the envelopes and were just winging it. But, even with a budget, we didn’t have a good way to track our spending. There were times we were down to less than $20 in the bank by the time payday came around.
Now with Goodbudget, we stay on the same page and can track every dollar. We’ve only used the app for about 4 months and have an excess in the bank at all times. We just saved up our $1000 emergency fund and have been paying down debt. The peace of mind has been tremendous. A big thank you to all of you who made this app available!”
“Prior to using Goodbudget, my husband and I were not good with savings or long term goals. We were paycheck to paycheck. When we first started we couldn’t allocate monthly, and didn’t even understand the concept. We started to allocate every paycheck. We eventually outgrew the habit of looking at our checking account and instead trained ourselves to look at the envelope for that item.
The result of changing this behavior was us managing to create additional envelopes so we could start being specific about what we wanted to use our money for. We reached a point where we had enough money saved for a car, and then enough money for an inexpensive online college for me to complete my bachelor’s degree. The next goal is to pay down more debt (that we are now managing through the new debt feature of Goodbudget).”
As you can see, it is possible to break the cycle. When you’re ready to break yours, check out our Stop Living Paycheck to Paycheck Goal to help you get started on your journey.