How do I stop living paycheck to paycheck?

Plus, lessons worth learning about financial literacy.

On the Money is a monthly advice column. If you want advice on spending, saving, or investing — or any of the complicated emotions that may come up as you prepare to make big financial decisions — you can submit your questions on this form.

A Vox reader recently wrote in: I am a personal finance teacher in Florida, where the state has recently mandated a semester-long financial literacy course for graduation. My students come from economic backgrounds ranging from daily uncertainty to affluence. The fin lit lessons universally focus on standard rules to follow in moving toward financial freedom, such as six months of income for an emergency fund, 70-20-10, 50-30-20, cutting lattes out of your life, etc.

These are one-size-fits-all answers that ring pretty hollow in households where the mere notion of saving and investing seems like a fantasy. When speaking to students on public assistance, in single-parent households, with modest incomes in the face of growing expenses, what pathways can I offer to them that are realistic? It’s an overwhelming challenge for so many Americans to climb the increasingly mythical ladder of success that resides at the core of our national identity.

If you want to help your students find realistic paths toward the next rungs on their individual ladders — which may or may not look anything like the so-called “ladder of success” — you need to ask each of them what ladder they’re trying to climb.

Many of them won’t know, especially if your students are still in high school.

But they’ll probably know something, like “I want more money” or “I want to go to college out of state.”

Ask them why — and make them be specific.

“I want money to buy skin care products,” for example, is a specific and realistic goal for a high school student. A college student might want money to take a trip or move off-campus or help out a parent who is struggling financially.

You can get your students even closer to the next rung on their ladders by asking them the why a second time.

“I want money to buy skin care products because I want to make better TikTok videos,” for example, or “I want money to help my mom because I know she’s worried about making rent.”

Then, see if you can get your students to put a number on their goal. Would they need $150 per month, or would the number be closer to $500?

Once the goal is defined to the second level of specificity and has a number attached, you can start talking tactics. Would it be better to earn an extra $150 every month, for example, or could they save the money they need by looking at their spending habits and figuring out what to cut?

Your students are likely to have very different answers to this question, many of which may be dependent on their household income (including whatever allowances they might receive) as well as the amount of free time they have and their level of entrepreneurial spirit. The purpose of this exercise isn’t to promote one answer over another; it’s to give your students realistic experience in evaluating various types of trade-offs.

From there, you can discuss how similar tactics might apply in adulthood. If they’re thinking about moving into a better apartment, for example, they’ll want to come up with a good reason for moving (to be closer to a workplace or to give each of their kids their own rooms) as well as a dollar figure that they might need to achieve their goal. At that point, it’s all about trades. Giving up a daily latte could add $30 to their apartment fund every week. Giving up a few hours every night could help them learn a new skill that could get them a job or help them build a side hustle. Which of these choices is easier to make? Which one could be more beneficial over the long term? (If no choices are available or possible, it may mean the goal is not realistic from their current rung of the ladder, and they may need to choose a different goal.)

All of this depends, of course, on your being able to teach your students more than the generic personal finance curriculum required by the state of Florida. I don’t know if you have the capacity to ask each student to define a personal goal to the second level of specificity, for example, or to talk to them seriously about tactics and trade-offs.

I suppose that if you don’t have that power or that time, you could always send them a link to this column.

From another Vox reader: Most Americans live paycheck to paycheck. How can we get out of the hole?

I could answer this question in two words: See above.

That said, I’ll run the exercise with you as an example of how this process works.

Why do you want to get out of the paycheck-to-paycheck hole? You don’t have to, after all. Most Americans, according to your own admission, live there, and you can have a reasonably fulfilling life living paycheck to paycheck, carrying balances on credit cards, and keeping your revolving debts within the boundaries required for a good credit score (which means not letting your debts exceed 30 percent of your available credit, just in case you didn’t have that number memorized).

Now I’ll be you:

“I want to get out of the paycheck-to-paycheck hole because I feel like I ought to be saving more.”

Not good enough.

“I want to get out of the paycheck-to-paycheck hole because I don’t want to have to worry about losing my job.”

A little better.

“I want to get out of the paycheck-to-paycheck hole because I want to build the kind of career that I can control, which could be a risky move, and I would be more comfortable taking that risk if I had a financial cushion.”

Good! We’re getting somewhere.

At this point I might start asking you about the type of career move you’d like to make, why you think the move comes with specific risks, and whether you could take those risks without a financial cushion — it’s possible, people do it all the time — and whether the money you plan to earn from your new career would in fact allow you to move out of the paycheck-to-paycheck lifestyle.

I’d also ask you how much of a financial cushion you think you need, just so we could get a number attached to your goal. At that point, you’d be ready to start evaluating tactics and trade-offs.

See how it works? Now let’s say you chose a slightly different answer:

“I want to get out of the paycheck-to-paycheck hole because I’m worried that I’m not saving enough for retirement.”

That’s one level of specificity. Can you give me two?

“I want to get out of the paycheck-to-paycheck hole because saving more money for retirement would allow me to travel more often and spend more time with my grandchildren.”

That sounds like the fantasy version of retirement. Is that what you really want?

“Yes. I want to take the grandkids to Walt Disney World and I want us to stay in one of those Animal Kingdom suites where you can see the giraffes outside your window. Whenever we do a family vacation, we’re always stuck in some Airbnb where my daughter and I have to do all the grocery shopping and cook all the food and they make you clean the entire place before you leave, and I want some magic, damnit, and I want it before all of us get too old to enjoy it.”

All right, now we can start planning — and so can you, once you start asking yourself the same questions.