Nearly 75% of This Age Group Lives Paycheck to Paycheck. Here Are 4 Tips to Break the Cycle

Living paycheck to paycheck is no fun at all. You live in fear of a medical bill your insurance doesn't quite cover, a car repair, or other surprise expense that is outside the bounds of your cash flow. In that case, you might put the bill on a credit card and then collect interest because you can't afford to pay it off right away.

This was my life for a long time, and I'm certainly not alone. As reported by CNBC, a recent report by LendingClub found that a whopping 73% of my fellow millennials (or those born between 1981 and 1996) are living paycheck to paycheck. This isn't so surprising, as many Americans are struggling due to inflation, general economic uncertainty, and recovering from big financial changes wrought by COVID-19. Plus, some millennials are caring for both their own children as well as their aging parents, and are therefore part of the "sandwich generation." All of these factors spell big potential for money stress.

Here are a few ways to cope, and perhaps leave the cycle of living paycheck to paycheck behind.

1. Create a budget

I know, I know -- no one enjoys budgeting. Here's the thing, though: If you don't know where exactly your money goes every month, you're leaving yourself in the dark as far as actually making effective changes to your financial situation. It's not hard to get started; in fact, there are a lot of great budgeting apps you can lean on. These could make the process easier and perhaps even more fun.

Alternatively, if you're a spreadsheet person, you can create a budgeting spreadsheet with as many bells and whistles as you need or want. Then compare your projected budget to your actual spending for a month. Once you have an honest record of your actual income and expenses, you can make changes.

2. See if you can decrease regular expenses

Got your budget? Excellent. Now take a look at how much you're spending on various expenses. You may not have the power to negotiate all your costs, but it's a good idea to reduce what you can, where you can. Maybe you can refinance an auto loan and lower your payment. Or call your internet service provider to see if there are any special promotions (or consider buying your own equipment to save on your monthly bill).

Can you switch to a cheaper cellphone service provider? Or maybe shop at a less expensive grocery store, like Aldi? You may even be able to negotiate your rent, say by offering your landlord help with maintenance.

And yes, you could cut down on your discretionary spending, too. If you're eating out once a week now, perhaps switch to once every other week until you've managed to give yourself some breathing room.

3. Work on creating an emergency fund

As someone who used to exist with no emergency fund, I can tell you that having money you can tap when you get that extra bill you haven't planned for is so good for your mental health. To know that you can just pay it without owing interest on the credit card you used to cover the bill? It's wonderful.

Common wisdom regarding emergency funds is to save three to six months' worth of expenses, and if you are starting from $0, that might sound like a pipe dream to you. Here's the thing, though: Every little bit you can save helps. If you've managed to cut $100 from your monthly expenses by employing the tips above, stick it in a high-yield savings account for those rainy-day bills. It'll add up over time (and earn interest) and help you sleep better at night.

4. Increase your income

You can't budget your way out of not making enough money. To that end, I heartily recommend finding ways to bring more money into your household. This could be getting a casual side hustle, like driving for a rideshare service a few hours a week. It might be taking on freelance projects if you have an in-demand skill like web development or graphic design.

It could be asking for a raise at work, or even changing jobs altogether. It might even be changing careers, and while this is a big step, it's worth it if you're growing dissatisfied with your job prospects. Don't discount the importance of transferable skills, and consider working with a career counselor or resume writing service if you're looking to play up your skills and parlay them into a new role.

If you're struggling with your finances, you are absolutely not alone. The above tips can help you get some more breathing room when it comes to money and therefore lower your stress levels. Take a deep breath, and remember -- you can do this, one step at a time.