If you want to stop living paycheck to paycheck should you spend less or earn more? Here's the answer. (It might surprise you!)A 2013 survey from Bankrate reported that 76% of Americans live paycheck to paycheck. A more recent survey conducted at the end of 2015 shows that 56% of Americans have less than $1,000 in their checking and savings accounts combined.

If you or your family is in this type of situation there is a way out. It will take work and won’t be easy but with a plan it’s completely doable.

So if you want to dig yourself out of the paycheck-to-paycheck cycle is it better to spend less or earn more? Here’s the answer.

Spend Less First

As a natural born saver I’ve long been on the earn-more side of the equation. This was before I took other types of behaviors into consideration.

I was in a paycheck to paycheck situation just a few years ago. My spending was already as low as it could possibly be it so made no sense for me to try and cut anymore. (I lived on $20k/year with two kids.) I felt my only option was to earn more and spent much of my energy in that pursuit.

BUT I can now recognize that my situation is far from the norm. While you might be tempted to jump right into the earn-more category it won’t make a difference until you get ahold of your spending first.

Here’s why:

If you currently spend all of your money and have nothing left over at the end of the month it’s likely that when you earn more money those expenses will expand. With a higher income you’ll feel the need to have a nicer house, better car and newer clothes. (Or whatever your spending habit entails.) If you don’t first get a grip on your spending you’ll end up in the exact same situation.

It’s like Parkinson ’s Law for money – “Expenses will expand to match income.” Therefore if you don’t get a grip on your expenses now, earning more money isn’t going to help you reach a point of financial stability or independence.

Not sure whether or not you have a spending problem? Read this post for some clues.

Once you cut your spending back and make it a habit you’ll free up money in your budget and hopefully, break the paycheck to paycheck cycle. If you’ve cut your spending down to mostly basics and still can’t pay the bills without relying on credit you need to earn more (and probably, but not always, downsize what you have.)

If you are like me and don’t like spending but can only cover very basic expenses on your currently income then you need to earn more.

Now Earn More

After getting into the groove of living within your means and saving a percentage of your income earning more becomes a good strategy for beefing up your savings and reaching your financial goals.

If you try to earn more before you’ve learned the importance of living within your means you won’t have much to show for your extra work – making it all fairly pointless.

And please don’t consider earning more money to be hopeless. It’s not. No matter your skills or level of education there are ways for you to increase your income. You just have to be willing to be creative and work hard for it. Don’t expect someone to hand you opportunities, it’s not going to happen. You have to create your own opportunities!

Using the Two Together

Just picking one strategy, spending less or earning more, depending on what situation you’re in could be all you need to do to get your personal finances back on track. If you want to reach your goals even faster you could consider doing both.

What side of the equation do you tend to lean toward?

About Alexa Mason

Alexa Mason has written 192 articles on this site..

Alexa Mason is a freelance writer and wanna be internet entrepreneur. She is also a newly single mom to two beautiful little girls. She chronicles her journey as a single mom trying to make it big at www.singlemomsincome.com.

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