Many people across the UK live paycheck to paycheck. This means they rely on each payday just to get by. If you’re in this position, it can feel hard – or even impossible – to think about paying off debt. But even with a tight budget, there are steps you can take to start improving your situation.
In this guide, we’ll explain what living paycheck to paycheck really means, how common it is, and what simple actions you can take to break the cycle. We’ll also look at how you can begin to pay off debt and where to find extra support if you need it.
What does living paycheck to paycheck mean?
Living paycheck to paycheck means you’re spending most or all of your wages on everyday expenses. That might include rent or mortgage payments, bills, food, travel and other essentials.
You might not have any money left at the end of the month. This can make it very hard to save or deal with unexpected costs. A broken boiler, a car repair or a rise in bills can push you further into debt – even if you’ve been doing your best to manage.
Do most people live paycheck to paycheck?
Yes, many people in the UK are in the same situation. Rising living costs, low wages and high rent or mortgage payments mean that even full-time workers can struggle.
In fact, a 2023 survey by the Office for National Statistics (ONS) found that around half of UK adults reported spending more than they earned or just breaking even each month, with little or no savings to fall back on.
It’s important to know that you’re not alone. Being in this situation doesn’t mean you’ve failed – it just means you need the right advice and support to take control.
How to stop living paycheck to paycheck
Stopping the cycle doesn’t happen overnight, but there are steps you can take to feel more in control of your money. Start small and focus on what you can do – even if it feels like a tight squeeze.
Create a realistic budget
A good budget is key. Write down all your income and outgoings, including every bill and regular payment. Then look at what’s left. Being honest about your spending helps you see where your money goes and where you might be able to cut back.
If you can, set limits for areas like food shopping, takeaways or subscriptions. Don’t forget to include irregular costs too, like car tax or annual insurance, so you’re prepared when these come up.
Free online tools or budgeting apps can make this easier. They can track your spending automatically and help you spot patterns. Try to review your budget regularly, adjusting it as your situation changes, so it stays realistic and useful.
Read our guide to budgeting for more tips, or check out our Disposable Income Calculator to help you put your new budget together.
Prioritise your outgoings
List your essential costs first – like rent, energy bills, council tax and food. These are called ‘priority debts’ because they protect your home and basic needs. It’s important to pay these before anything else to avoid serious consequences like eviction or disconnection of services.
If you’re behind on any of these payments, contact your provider as soon as possible. They may offer payment plans or support to help you catch up without extra charges.
After essentials, look at non-priority debts such as credit cards or personal loans. Try to pay at least the minimum on these, but focus most of your money on priority bills.
Tracking your outgoings regularly can help you spot any areas where you might save money or adjust spending to cover essentials first.
Try to build an emergency fund
Even saving a small amount – like £5 or £10 a week – can help build a buffer. An emergency fund is there to cover surprise costs, like a broken appliance or vet bill. Without one, even a small unexpected expense can lead to more debt.
You don’t need a big amount to start. Aim for a small goal, like £100, and build from there. Keep it in a separate account so you’re less tempted to spend it.
StepChange’s 2015 evidence to Parliament showed that having £1,000 in savings can cut the risk of falling into problem debt by 44%. That shows how even modest savings can make a big difference.
If you can, try setting up a standing order after payday or using an app that rounds up your spending to help you save without thinking about it. And if you need to use the fund, that’s okay – it’s there to help you avoid borrowing when life throws something unexpected your way.
Manage and target paying off debts one at at time
Trying to tackle all your debts at once can feel overwhelming. A more manageable approach is to focus on paying off one debt at a time while making minimum payments on the rest. This helps you stay motivated and reduces the risk of missing payments.
There are two popular ways to do this. The debt avalanche method means paying off the debt with the highest interest rate first. This saves you the most money in the long run. The debt snowball method focuses on paying off the smallest debt first, helping you build confidence and momentum.
Choose the method that works best for you and your situation. The most important thing is to make steady progress. As each debt is cleared, you free up more money to tackle the next one.
Keeping a list or using a simple tracking tool can help you stay organised. Some people even reward themselves (in a small, budget-friendly way) after clearing a debt, to stay motivated. Just remember – slow and steady wins the race.
How to get out of debt living paycheck to paycheck
It’s not easy to pay off debt on a low income – but it is possible. The key is to:
- Understand your debts: List who you owe, how much, and what interest you’re paying.
- Speak to your creditors: You might be able to pause payments or agree to a lower amount.
- Look into debt solutions: Depending on your situation, options like a Debt Management Plan (DMP) or Individual Voluntary Arrangement (IVA) may help.
These solutions can help reduce your monthly payments OR even write off some of your debt over time.
Where can you get help with debt?
If debt feels overwhelming, remember you don’t have to face it alone. For free advice, you can visit MoneyHelper for information on managing debt and to access free debt advice. Speaking to an FCA-regulated adviser means you’ll get reliable help tailored to your situation, including support with negotiating repayments or finding the best way to reduce your debt.
Alternatively, we can offer confidential support to help you understand your options here at MoneyPlus. We can also guide you through a number of professional debt management solutions, such as Debt Management Plans and Individual Voluntary Arrangements (IVAs). Get in touch to find out more.
