How can I stop living salary to salary?

Here are some practical tips to help you get out of the vicious cycle of barely having enough money to last from one wage day to the next.

  • De-stress. Recognise you are not alone and that there are solutions
  • Understand the underlying issues so you can tackle them better. Usually the reason will either be
    • a lack of spare cash;
    • lack of motivation;
    • lack of money management skills
  • Use these practical ways to build up savings:
    • Calculate the gap between your income & expenses;
    • drastically reduce your spending;
    • differentiate between essentials & spending out of habit;
    • increase your earnings;
    • start saving automatically

Without the cushion of some money put by, the smallest emergency can upset any budget you have in place. According to the Money Advice Service, nearly three-quarters of the people in their survey had at least one financial emergency every year. Whether that’s car repairs or an unexpectedly high utility bill, it’s one of the main reasons that people turn to payday loans.

Everyone knows that living pay cheque to pay cheque is a financial hardship. But did you know that it also has an emotional price? Before we consider the ways to stop just scraping by from one payday to the next, we’ll consider why people do this and how to change your mindset so you can turn your lives around.

The Emotional Cost of Living from Salary to Salary

Having financial problems can be extremely stressful and this very stress can make it impossible to change your behaviour. Before you put practical measures into place, you must alter your attitude towards your situation.

First of all, even though it may seem as if everyone else is doing fine, you must understand that you aren’t alone. The Money Advice Service found that more than 16 million Britons (or 2 in 5 of the working population) had less than £100 in savings.

You should also get rid of any feelings of shame or inadequacy about your situation. These very feelings tend to make you freeze and keep you stuck in a rut. Try to identify the types of behaviour which are keeping you from saving. Then, think of practical ways to change. Maybe you claim that you can’t save? Let’s look at why this might be so.

Common Excuses for Not Saving Money

In the same research, the Money Advice Service found the 3 most common reasons people give for not being able to save.

  • Lack of Spare Cash
  • Research found that income had nothing to do with people’s saving habits. 45% of people earning over £30,000 a year had no savings whilst 23% of people making under £13,500 had savings of at least £1,000. If it isn’t about your earnings, the obvious conclusion is that spare cash depends on your spending habits.

  • Lack of Motivation
  • You must create your own motivation for saving. This could be a long-term goal such as saving up the deposit for a house. Or it might be a short-term goal like gradually building up an emergency fund.

    You must sit down and think what you really want and what would make you feel better. With a goal in mind, you’re more likely to put money by.

  • Lack of Money Management Skills
  • Many people said that they didn’t have a clue about how to save and blamed lack of education in money management skills. If you don’t know how to create a budget, there are plenty of sites like the Money Advice Service with advice and tools to help you. Alternatively, organisations like Citizens Advice could give you tips about drawing up a budget.

This fun quiz can give you a bit more of an insight into whether you have the personality of a spender or saver. The results and advice are not intended as professional or absolute, but merely as an indicator to your spending habits.

Let’s begin with our own practical step-by-step guide to get you started.

Practical Ways to Build up Savings

  • Calculate the Gap Between your Income & Expenses
  • The first thing to do is to work out your income over a 90-day period. For the same period, calculate how much you spent referring to your bank account and credit card statements. Without this overall picture of your financial situation, it’s impossible to break this cycle of having spent all your income before payday and to start saving.

  • Drastically Reduce your Spending
  • For a period of one month, limit all your spending to the essentials (housing, food, utility bills and transport). Any money which is left at the end of the month should be put in a separate savings account to start your emergency fund.

    In the following month, gradually add some discretionary spending. Make sure that your spending on non-essentials isn’t put on credit and that you’re still left with enough money at the end of the month to add to your savings account.

  • Differentiate between Essentials & Spending out of Habit

  • Some of the things we buy aren’t really necessary and we’re just spending out of habit. Take the example of socialising, do you really need to go to the same places every weekend? Why not suggest cheaper forms of entertainment to your friends? If they’re in the same boat as you when it comes to money, they’ll probably be grateful for the change.

    For every purchase ask yourself whether you really need it and whether there are any ways to make savings. This is equally true of your spending on essentials. Looking for supermarket special offers or switching energy suppliers are just two of the many ways you can further reduce your expenditure.

  • Increase your Earnings
  • Find out if there are any ways that you could increase the money that you take home. Asking for a raise, using a hobby to make extra cash or taking on a part-time job in the evenings or at the weekends are all ways to boost your income.

    Why not improve and expand the skills you need for your profession through seminars or evening classes? In this way, you’ll be eligible for a promotion or could apply for higher-paid jobs.

  • Start Saving Automatically
  • Once you have some money in your emergency fund, you’ll realise how easy it is and how much better you feel psychologically. After your initial deposit, saving should be done automatically every month. Set up a direct debit so that 10% or more of your income automatically transferrs to your savings when you get your wage. Don’t wait until the end of the month or you might find there’s never enough left.

Stop Living Salary to Salary – Conclusion

Some articles with practical budgeting advice often forget that being able to save has a psychological side to it as well. Anyone can put money by and stop living wage day to wage day. However, before you can do this, you have to alter the way you think. Until this is done, you’re more likely to sabotage your own budget and lapse back into bad habits again.

Tracy Walter
Tracy is an avid hiker who loves to explore nature. As a child, Tracy went on skiing holidays in the Swiss Alps during the winter which inspired her passion for nature. She is a tour guide by profession, and especially enjoys it when she guides foreign groups. In her spare time, she likes to write whilst sitting on her 4th floor balcony in London City. Tracy’s baby keeps her busy with whatever time she has left.

The article "How to Stop Living Salary to Salary" was last modified on