12 ways to escape the pay day cycle as inflation jumps to 3%

Marie-Claire Dorking
·Contributor
·7-min read
Putting money away as inflation has jumped to 3%. (Getty Images)
Inflation has jumped to 3% which will leave many struggling to escape the pay day cycle. (Getty Images)

News of the recent rise in inflation will not be welcomed by the thousands of Brits trapped in a pay day cycle.

Official figures reveal UK inflation has jumped to 3%, it's highest level for 10 months, but with research finding over a third (34%) of workers are stuck living pay check to pay check, the idea that money will have to be stretched even further will hit hard.

The survey, of 2,000 workers, found more than a third are only one pay check away from serious hardship, with one in four not having enough money to spare after buying necessities, but experts say this type of living not only impacts our finance but can have a serious affect on mental wellbeing.

The pay day cycle refers to a pattern of spending behaviour where people spend a lot of their wages right after pay day, leaving them with less and less throughout the month.

"This keeps many trapped in financial stress, as wages often barely cover monthly expenses, making it difficult to save or plan ahead," explains Sebrina McCullough, director of external relations at Money Wellness. "But people living pay check to pay check can quickly spiral into debt with just one unexpected expense, like a car repair or a home issue."

Financial experts say rising living costs and increases in council tax, broadband and mobile and car tax, which will all go up in April, along with stagnant wages and high levels of debt have all contributed to a rise in families living this way.

But, there are ways to escape this cycle.

Woman checking her finances. (Getty Images)
Over a third of UK workers are living pay check to pay check. (Getty Images)

Check your accounts - regularly

It seems obvious, but regularly checking your bank accounts means you’ll know exactly what’s coming in, what’s going out and what you can afford to spend right now.

"To start getting a better understanding of your finances, make checking your accounts a priority," Liz Hunter, commercial director at Money Expert advises. "This might be a weekly sit-down session where you review what you’ve spent and what you’ve got left to spend – or, if it feels more achievable – a quick balance check once per day."

Setting a monthly budget is a great way to reduce financial stress, as it can help you avoid overspending and pull you out of the pay day cycle.

"As soon as your wages go into your account, add up your essential spending," advises Hunter. "This includes any debts you need to pay, monthly rent or mortgage payments, bills, childcare and groceries. Once you know how much you need to spend each month, you’ll be left with your disposable income. To make this last, split this amount up so you have a weekly spending allowance."

Bills might be essential, but it doesn’t mean they’re set in stone. "Use comparison sites to see if you could reduce your monthly or annual outgoings for broadband, TV and mobile services, as well as car, home, life and pet insurance payments – especially if you’re out of contract or it’s due for renewal," Hunter suggests.

Reviewing your non-essential spending could greatly impact your financial health in 2025. "Once every few months, take a look at your bank statement and write down what you’ve spent in the previous month and why," Hunter recommends.

"Once you’ve got the figures in front of you, it should be easy to see where you can cut back. This way, you can adjust your spending and direct money to where you need it more, such as into your savings account or to pay off debt."

The 50/30/20 rule is a simple way of managing your money, after tax, by setting aside:

  • 50% of your take home income for needs

  • 30% of your take home income for wants

  • 20% of your take home income for savings

Needs are the basics of life and include your rent/mortgage, rates, electricity, gas, food, insurance. It also includes minimum debt repayment but not things subscriptions to online entertainment, spending on takeaway coffees and juices or eating out.

Wants include all the things you spend money on that are not essential.

Savings include repaying debts beyond just minimum repayments, saving money for emergencies and saving for your retirement.

Life is busy, which means transferring money into your savings account might be the last thing on your priority list and if you don’t necessarily have the money to save at the end of the month, then it’s even harder. "That’s why, if you’re able to, setting up a standing order from your current to your savings account is a great way to automate the savings process," advises Hunter.

Scheduling it to go out immediately after you get paid is a good idea. "This means you’ll make saving a priority over your non-essential spending, rather than just saving whatever happens to be left in your account at the end of each month."

Participating in money saving challenges can make the task seem less of a chore while having a bit of fun too. "From the 52-week challenge to the 1p challenge, there’s something for every kind of saver," advises Chris Henderson, savings director at Tesco Bank.

"You could complete some challenges alongside friends too, like a ‘no spend week’ to keep you motivated and also accountable."

If you find saving difficult, then turning on round-ups in your banking app is a great way to save while you spend. "It works by rounding up anything you spend to the nearest pound and putting the difference into a savings pot or account," explains Hunter.

According to the bank Monzo, customers save an average of £129 extra by using round-ups. Nationwide calls this option 'spare change' and on the Lloyds app it's 'save the change'. No doubt other banks offer this service, too.

Woman making an online purchase. (Getty Images)
Experts recommend becoming a more intentional buyer. (Getty Images)

Being more intentional with your spending could help you escape the pay day cycle.

  • Create lists: When you think of an item you genuinely need, add it to a shopping list. "Use this list to control what you spend your money on and re-consider impulse purchases – if it’s not on the list, do you really need it?" Hunter says.

  • Use the 48-hour rule: If you spot something you really want to buy but don’t necessarily need, wait 48 hours before buying. "This gives you enough time to consider the purchase and research other options to make sure it's worth spending your money on," Hunter suggests.

  • Research and compare prices: If you have something specific in mind, look for the best deals, compare prices online and seek out discount codes before buying.

  • Beware of sales and special offers: Avoid being taken in by extreme discounts. "If you don’t need an item, then you aren’t saving money by getting it at a lower price," Hunter explains.

  • Create friction to resist impulse purchases. Alice Tapper, financial expert and Kaldi ambassador. "This not only reduces impulse spending but helps you to become more mindful of the influences that advertising is having on your everyday spending," she adds.

Make the most of your purchases by layering savings and discounts. "For instance, you can use a credit card or loyalty card that earns points, combine it with a browser extension or plug-in that finds discount codes, and sign up for cashback services," explains Tapper.

Build a spending plan where every pound has a purpose. "You could opt for a zero-based budget where you decide exactly what you’ll spend every pound of your income on, or you could go for a strategy where you allocate a percentage to savings, a percentage to bills, and then the rest for fun stuff," Tapper adds. "This will help to flip the narrative on shame-spending, removing the guilt from buying those all-important ‘little treats’ with your remaining disposable income."

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