Living a life paycheck to paycheck - Financial Planning

Moving away from comfort zone

I have been asked this question a number of times since I left the corporate life – Why did I leave a cushion high paying job to start on my own with an unpredictable income stream and so much uncertainty considering the frequent and abrupt regulatory changes. So, let me try attempting here to provide my rationale. How we can stop living a life paycheck to paycheck and what we can do to plan it. Let me tell you it is not very difficult. But yet, many of us still do not do it while we want to. Why is it so?

The biggest reason is the complacency factor regarding money security and not wanting to move out of the comfort zone. Working in the private sector also means that income can stop soon after we stop working and retiral benefits could be very minuscule. There is a provident fund, but many of us withdraw it on the way. Sometimes withdrawal is done to meet some of our wants rather than saving it for our needs. Also, the lack of insurance – be it life or medical insurance. The job market is getting more competitive and average employment duration  is coming down. There is also a threat of automation taking away jobs. There is always a risk of not getting back employment if one does desire to be an entrepreneur to follow one’s passion. What if it does not go well and has to be shut down? Also, there could be other societal pressures which become a barricade in front of us, dissuading us from going solo!

So, what do we do? Let me tell you that if planned well, the entire process can be seamless. What we need to do is that during our working life we get paychecks, we need to build a system around it which can generate regular income for us later when we are not working.

Clearing some myths

Let me start with the clearing of some myths. Number one is that this is the problem of the people with lower income and not of those who are earning higher salaries. It is, in fact, a bigger issue with those “richer” people. It is more important to understand what we do with the money rather than how much we earn. Most of the times, we plan to save money only what is left over after our expenses in the month (which happens fewer number of times or does not happen at all!). But in fact what we need to do is to first save for investment and then spend the money whatever is left after that.  

How to not live paycheck to paycheck?

Building assets are of prime importance and taking the power of compounding to our advantage by starting early. This is the secret towards cutting back dependency on the paycheck. At times what we instead end up doing is building up liabilities – like taking loans to fund something which is a depreciating asset like cars or extravagant holidays. Let me clarify, I am not against any of these, after all, we live life once, but why spend our Principal money or worse take loans for it. If we can defer our cravings for a few years, take compounding to our advantage, let money make money and then spend. I have met so many people who are actually, if you look at it, not working for themselves, but for their banks! Those who are not able to generate passive incomes have no choice but to continue to live a life working from paycheck to paycheck.

Would doing this get me financial freedom?

Here’s a disclaimer – there is no quick fix to financial independence and it needs to be planned systematically. It could be painful in the beginning, wherein you delay your gratifications. Everyone has gratifications which are immediate, just that they may be of different levels and value. As an example, for a child, that gratification could be a simple toy or an ice cream. But for an adult, it could be something more expensive like a gadget, a piece of jewellery, an exotic vacation etc. I am not suggesting that we lead an ascetic life but we need to find a balance. Ask someone who is financially independent and is debt free. The feeling is bliss!

Now that hopefully you would be convinced that we all need to save, let me tell you that saving alone isn’t adequate. Saved money must be invested to buy income generating assets. Higher the asset base, higher is going to be the passive income.

In my more than two decades of corporate life, I have seen people working just to get a higher salary income. Finding innovative ways of pleasing their bosses and to be in their good books. It could sometimes be even unethical, suppressing their conscience, or at the expense of other colleagues. But is that really worth it in the long run? And then there are those who keep switching for jobs providing them higher income, without considering whether that job is what would give them the best job satisfaction at the end of the day. If not, then this dissatisfaction starts creeping and starts showing up in their other aspects of life like their personal, social life etc. Then there are also those people who are financially independent but then they work in a job because they like it and feel they are adding value to themselves as well as to the society at large. Though unfortunately, such people are only fewer in numbers and are rare, but they do exist.


If you were to ask me, our goal in life should be not just to make money but also consider the quality of life. Being financially independent can greatly help in increasing the quality of life. By generating enough assets which are income generating can get us to lead that life, slowly but surely. Do look out for my blog in future wherein I would talk about what we can do to boost our net worth.

Do get in touch with your Independent Financial Advisor (IFA) or Certified Financial Planner (CFP) to understand what would work for you and then in consultation, design a financial freedom roadmap for yourself.

To read more blogs from me on personal finance, please visit my website For any queries, you may get in touch with me at

Living a life paycheck to paycheck



Leave a Reply