Break the Paycheck-to-Paycheck Cycle

Some resolutions are made every year, and some resolutions seem to be made every two weeks. That's because many of us have a difficult time breaking the cycle of over-extending ourselves financially and barely hanging on until that next payday.

Mitch Vocke, Chief Lending Officer at Telhio Credit Union, suggests that financial education and planning are the starting points to ending this frustrating cycle.

"I've met with quite a few CEOs of mid-sized businesses with employees who are asking for advances on their paychecks," he said recently in a Business First Table of Experts discussion. "Research has shown that people who live paycheck to paycheck are less productive at work. [It can also affect] the overall health and wellness of the business owner, the business entity, and employees."

Unfortunately, it's a common problem. In fact, as of August of 2023, roughly 61% of Americans are living paycheck to paycheck, an issue that impacts both low-wage and high-income families alike, according to a report this month on And while rising living costs contribute to the problem, 10% of people in this scenario admit non-essential spending is the top reason for living paycheck to paycheck.

If you are determined to make your paychecks last beyond two weeks, consider making a plan for every paycheck. For this exercise, you will essentially begin by telling your money what to do.

Step 1: Write down how much money you currently have and what you want that money to do before your next paycheck. It may sound simple, but having one goal is a great place to start. So, to begin, complete the following sentence: I want my money to ___________ before my next payday. This is your starting point.

Step 2: List out your income and expenses. Make sure to include any incidental expenses that are coming up this month. Is there a holiday party, a birthday, or perhaps school fees? Write it all down. You will also want to factor in money for gas and groceries. Next, print a calendar and highlight your paydays. Note how much money you are expecting to receive on each payday. Then, go back to your list and write out your expenses and their due dates. Match your expenses with the corresponding pay period so you can determine which paycheck will cover each expense. The goal is to assign expenses to each payday check.

Step 3: Repeat for each month. Having a structured plan for your paychecks will not only empower you but also bring a greater sense of peace of mind. If you find extra money remaining, make a plan for those funds as well.

Discretionary spending is the amount of money you spend on non-essential purchases, such as entertainment, meals at restaurants, gifts, toys, and other related purchases. Most people are surprised at how much money they spend on non-essential items. Set aside funds to cover your high-priority bills first. Allocate a reasonable amount of money for miscellaneous purchases, such as dining out and entertainment.

Being in control of your finances won't just fix your budgeting problems, but it will contribute positively to your overall health. High levels of financial stress manifest through physical symptoms like sleep loss, anxiety, headaches or migraines, compromised immune systems, digestive issues, high blood pressure, muscle tension, heart arrhythmia, depression and an overwhelming feeling.

So, make a resolution to plan your paychecks and break the cycle of worry. Being proactive will put you back in control of your health, your happiness, your productivity and your financial well-being.