How to live paycheque-to-paycheque

Living paycheque-to-paycheque is forcing Canadians to get creative with money management.

Because of this, you’ll find plenty of wisdom floating around about how to live well despite financial uncertainty. But, since abundance can often lead to overload and confusion, it’s easier to start simple. 

For making life work paycheque-to-paycheque, it can help to think of four basic categories:

1. Lifestyle changes
2. Budgeting techniques
3. Increasing your income
4. Managing your debt

Let’s look at each more deeply.

Lessen your end-of-month stress with some lifestyle changes

End-of-month jitters, month after month, is no way to live. It’s like spending five days constantly doing math and hoping nothing financially unexpected happens to your car or your computer or TV.

The answer, is of course, spend less money. And that may seem impossible, given how much you might have already cut back — and especially if you’ve already switched grocery stores or dropped your gym membership, etc.

So, instead of thinking about spending less, approach it from a place of improving your life.

1. Take up a low-cost hobby — The benefits of having a hobby are well-documented. And the cool thing about YouTube is that you can learn just about anything, for free. So, think about what you’ve always wanted to master and get started. Every minute you’re expanding your knowledge or practising your technique is a minute you’re not out there spending money. And even if you have to put out a bit up front for a used guitar or a few starter plants or a set of drawing pens, the investment in yourself and your money-saving efforts will be well worth it.
    
2. Declutter your space — The immediate benefits to this are the sense of achievement when you’re done, and the money you’d earn selling what you can. From there, you can prioritize only purchases that won’t lead to clutter. This could mean you don’t buy that shirt you saw online. Before you know it, you’ll start to have more money towards the end of every month, and far less stress.
     
3. Exercise at home— Running is an easy way to exercise without a gym membership. If you prefer lifting weights, you can buy some dumbbells to use at home. Again, no need for a gym membership.

Commit to easier budgeting 

In 2019, the Canadian government reported that 51% of Canadians don't make a monthly budget. 

According to BMO, that number ballooned to 60% in 2023. And it’s not hard to see why. Budgeting is hard work. And it can feel too hard when the stress of living paycheque-to-paycheque is already weighing heavy.

So, make it easier. Remember: you’re in control.  

1. Be realistic and honest with your budget — Setting unattainable goals is a recipe for failure. Be honest about what you like spending money on and work it into your budget at the expense of something you could do without. You may have to make some tough-ish choices, but with a bit of introspective thought, you’ll know what’s worth keeping in.
     
2. Cut yourself a bit of slack when the situation dictates — Your budget should be a target, not an exact number down to the cent. If spending another hour with an old friend is going to cost you an extra nine bucks you didn’t budget for the evening, it can be ok to spend it. As long as you don’t decide to slip from your budgeting habit regularly.
    
3. Use cash when you can — It’s way too easy to spend money with a card. Using cash requires getting the right amount out, counting it and handing it over. During that comparatively laborious process, you have the time to think about what you’re about to hand over and if it’s really worth what you’re getting. Also, you won’t have to pay credit card interest fees.
   
   
4. Build emergency savings — If you have any money leftover at the end of the month you should be trying to save it. You never know when the unexpected will happen, and you’ll need to buy a new laptop or repair your car. A good way to do this is to set up automatic transfers to your savings account through your bank. This way you’ll save without having to remember to do anything and you won’t be able to touch the money.

Make more money every month

Many people living paycheque-to-paycheque are amazed to find out how many ways they have to make their monthly paycheques bigger. And the options range from using the skills they have, to requiring no skill at all.

1. Buy and sell stuff online (a bit of skill required) — A market for everything has existed since the dawn of time, and the Internet has made finding them all really easy. Start with the stuff around your place you don’t want anymore (see above on decluttering). You can open up free accounts on eBay and Kijiji, and Facebook Marketplace is always free. Once you become a bit savvier on those platforms, and you have a better sense of what people want, you can regularly buy low and sell high to pad your account even further.
    
2. Pick up some freelance work (skill required to charge a lot) — People these days also call it gig working, and it can be very lucrative if you’re talented, available or both. A common misconception about gig working is that it’ll be something creative like writing or design or web development, but it doesn’t have to be at all. You could take on gigs as a bookkeeper, as a dog walker, an Amazon delivery driver or as a rideshare/food delivery driver.
    
3. Test apps, games, websites and surveys (no skill required) — With a few online searches, you’ll find many places to earn extra cash this way. Most are free to register for, and you can earn steady every week.

Reduce your debt load prescriptively

Note that prescriptively doesn’t have to mean quickly. But it does mean smartly. In the case of debt, smartly means the following:

1. Focus your efforts on the debts with the highest interest rates — Like we mentioned above, you won’t find a better way to blow your budget than sky-high credit card interest fees. The sooner you can clear the principals on those +20% loans, the much better off you’ll be. You may carry more individual units of debt for longer, but you’ll pay less to carry them every month.
    
2. Make debt payments when you’re flush — The easiest way of doing this is to have a percentage of your paycheque syphoned off directly towards paying your debt. The benefit here is that you pay your debt without even really noticing. If this works for you, you can set up all your monthly bills to be paid this way. But be sure to spread them out so you’re never left behind at the end of the month.
    
3. Resist the urge to take on more debt — This can be a challenge in cases of unexpected expenses like car or home repair but do your best. Even if paying some of the bill with cash will help. 

A final thought about the prevalence of paycheque-to-paycheque living

Economic times like the one we’re all living through now will obviously create more paycheque-to-paycheque living — especially when the risk of job loss is so high and the cost of everything is going up. But these times will pass. And if you can come out the other side of it with better life habits, smarter spending habits, more earning potential, and less debt, you’ll be in great shape.

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