10 Ways to Reduce Financial Dependence on Your Job

For many people, the two biggest sources of stress and emotional frustration in their lives is their financial situation and their job, and those two frustrations are usually deeply interconnected. I like to call it the “golden handcuffs” — if you’re in a tough financial spot, you are handcuffed to your job (or one that pays at least that much) no matter how difficult and stressful that job is, and your boss often knows how much you need that job and can exploit that, adding even more stress to your plate.

The catch is that many people respond to this stress by diving into comforts, luxuries and vices. They spend their paycheck in frivolous ways that help take their troubles away for a little while, but they come right back with a vengeance on Monday, the next Monda and the next. Many others struggle to have the means to even keep their bills paid, which means the stress never really goes away at all.

That’s the reality in which four in five Americans found themselves before coronavirus and the resultant unemployment spike.

The path out of this mess is to get a grip on your financial situation and turn things around so that you’re not in constant threat of your life falling apart if you lose your job. You want to be able to not constantly fear the pink slip (whether consciously or subconsciously) and to not fear the bills in the mail, either.

Trust me, when you take that weight off your shoulders, it is life-changing. Every single day feels more manageable. Every single day feels more abundant with options.

10 Ways to reduce financial dependence on your job

1. Kill off your vices.

For some, it’s alcohol. For others, it’s smoking. For others, it’s drugs. For others, it’s shopping. For others, it’s unhealthy expensive food.

For me, it was really the latter two, with a bit of the first, too. I dealt with my work frustrations by buying lots of things, particularly books and gadgets, because that experience took me away from the frustrations for a while. I ate a lot of unhealthy food at restaurants and drive-thrus for the same reason — it was a quick escape into the bliss of delicious food. I also found myself falling into patterns of social drinking, as I would often go out with coworkers after work for a drink or two and some bar snacks (again with the unhealthy expensive food).

Those things were not helping me. They were temporary reprieves from the real problem, and those temporary reprieves were actually making the real problem worse.

The solution was to kill off those vices. I stopped going out for drinks. I stopped eating a lot of unhealthy foods. I stopped buying so much stuff and so many unnecessary experiences.

Of course, that points right to a different problem. Getting rid of those vices can create a sense of having a void in your life. As I eliminated those things from my life, I found that even though I knew I was actually fixing my problems rather than postponing them, I still missed those vices.

2. Figure out what you really missed, and bring those things back in a meaningful way.

The thing is, when you start clearing out those things that you have been leaning on for a little bit of temporary relief, you’re going to miss some of them. You’re going to miss some of them a lot. That’s completely normal.

The trick is to figure out how to bring back meaningful parts without bringing back the destructive parts.

Take alcohol. As I mentioned above, I was very much in a routine of going out with many of my coworkers for drinks after work. We’d go somewhere, have a margarita or a beer or something, talk about work, usually share several bar snacks (I loved fried pickles), and just let off some steam. The problem was, $20 or $30 would leave my wallet almost every time I did that. I’d buy a couple of drinks, an order of bar snacks, and play a game or two with people and the cash would just go away.

Obviously, that routine had to go. It was costing me hundreds per month. But I missed it. The question is, what did I miss about it?

The thing I missed was the social element, the people. Not those specific people, mind you — although I kept a friend or two from that era, most of them drifted out of my life pretty quickly thereafter. Rather, I missed having a social group to hang out with. It wasn’t the beer or the bar snacks or the arcade games that I missed, but the social connection.

So, I sought that social connection elsewhere. I looked on our community’s calendar of events. I checked Meetup (actually, a nascent local version of it). I went to meetings of pretty much every open community group I could find.

Sarah and I also started having dinner parties. We invited people over to have a potluck dinner with us and then we’d either sit around and chat or play a game or watch a movie together.

I’m not kidding at all when I say that my social life right now is more full of people than it has been at any point in my life, and I didn’t need to keep going out for drinks after work to do it. That new social direction filled that hole in my life perfectly.

Yeah, it was awkward at first. I went to a lot of things that just didn’t click. I stuck with it, though, and I found my people eventually. You will, too.

Find what hole in your life that each of your vices was plugging and ask yourself how you can fill them in a more meaningful way without just opening your wallet. Those are the things you really need in your life.

3. Talk to your boss about a real pathway to a raise.

Let’s start out by assuming you don’t have the best reputation at work with your boss. Before you do anything else, you’re going to have to improve that reputation.

What does that mean? It means showing up on time, every time. It means showing up rested, cleaned up, presentable and ready to do your job. It means doing all of the un-fun tasks and doing them as well as you can. It means being polite, helpful and friendly even when you don’t feel like it at all. It means doing those things every day. That’s how you build up a good reputation at work.

If you can’t do those things, you aren’t going to go anywhere. The jobs that pay well assume that kind of behavior.

Let’s say you do have a good reputation at work. You show up on time every time. You rarely call in, only doing so when it’s absolutely disastrous. You show up rested, cleaned up and ready to work. You do all of the tasks as well as you can, even the miserable ones. You’re polite and friendly, especially with clients and customers. And you do those things day in and day out.

If that sounds like you, then it’s time to talk to your boss. Sit down and make your case. List those things off. Make it clear that you’re a good asset to have, someone who just handles things and handles them reliably. Then, ask what steps you need to take to earn a raise. Don’t ask for a raise or demand it, but instead ask what you need to do to get one, and ask for a timeline for those things.

If you just straight-out ask for a raise without really understanding what performance warrants it, you make it easy for the boss to tell you no. It’s much harder for the boss to say no when the boss tells you what needs to be done for a raise and you do exactly that.

Whatever the boss tells you, that’s your new checklist. Put it on top of the things you’re already doing and execute them well. Then, when you go back to your boss at the end of that timeline, you’ve got your case in hand for a raise, and suddenly you’re making more with every hour of work.

4. When money comes in, don’t waste it.

Whenever you find yourself with a windfall, whether it’s money given as a gift, a stimulus check, a $20 bill you find blowing down the street, or even just some leftover money from your paycheck, it can be really tempting to just spend it on something fun.

The thing is, when you spend that money on something impulsive and fun, that money is gone very quickly, as is the fun. The pleasure that you get out of those impulsive expenses is nice, but it evaporates very quickly and you’re right back where you started.

There are two things to take away from this.

First, if you find money, use it for something worthwhile. We’ll get to the things you should do in a bit, but the key thing to ask yourself is how can I use this money to move my life forward a little. When you consistently choose to move your life forward a little, you end up moving it forward a lot.

Second, impulsive pleasures are great, but aim to find ones that don’t involve spending money. What fun things are available in your life that don’t involve shelling out cash? For me, the big thing that really brings me joy without spending money is spending time on something I really care about. If I give myself an afternoon to just get lost in a hobby I really enjoy, that feels far better than anything I could have done with some found money. I also fill my life with a lot of little free (or nearly free) pleasures, like really really good stretches, and I let myself get lost in the moment of enjoying those pleasures.

Don’t waste the money you worked hard for or that luckily found its way onto your lap. Use that to make your life a little better. Rather, find other ways to be spontaneous or to find a little blip of pleasure.

[Read: 10 Financial Changes to Make For Your Future Success]

5. Check and question every dime you’re spending.

One thing that frequently gets people into financial trouble and causes them to fall into a paycheck-to-paycheck cycle is that they lose track of where their money is going, and when that happens, money is often spent on things that don’t really bring you value.

There are a lot of flavors of this, of course, and I won’t get into specific strategies for each type of poorly directed spending.

Rather, you should adopt a habit of questioning where every dime of your money is going. If a dime leaves your pockets, you should be asking why.

I always ask myself three questions when I spend any money or when I see money automatically leaving my checking account.

First, is that expense really necessary? Is it providing something that is truly vital in my life? If it’s not, that purchase deserves to be second-guessed. My usual strategy for those kinds of purchases is to delay them for at least a month, although I do keep a small amount of pocket money for impulsive spending. It is completely OK to come back after a month and decide that a purchase really is worthwhile for you, that it’s something you really want, but spending money on wants should be done with some care.

Second, if this purchase is necessary, is there another way to achieve the goal without spending money? Could I borrow the item? Could I have most of that experience without spending money? Could I make it myself? Do I have something else that already does the job?

Third, if this purchase is necessary and I do need to buy something, is there a low-cost version of it? Do I need to buy the name brand version when the store brand is right there? (The store brand should virtually always be your choice.) Does this small package make sense when the bigger package is way cheaper per use? Should I shop around for this insurance package?

If you apply those three questions seriously to every dime that leaves your pockets until those questions become your natural response, you’ll find that you spend with a lot more care, but that the expenses that go away are the unimportant things, the things that don’t really matter.

6. Get up to date on every single bill.

The first five steps in this plan should serve to help you get your spending under control. If you’re like most Americans, money leaves your accounts almost as fast as you bring it in. The first five steps should serve to both expand the money flowing in (a bit) and shrink the money going out (a bit) without disrupting your life.

That means, of course, that money will start accumulating in your accounts over time. As noted earlier in tip #4, you need to resist the urge to spend it and instead use that money to improve your life, and that’s what the final five strategies are about.

How should you start? Easy. Get current on all of your bills. That should be the absolute first step you take, for three big reasons.

First, late bills accumulate late fees. If you’re consistently late on your bills, you’re getting consistently hit with late fees, and that becomes even more of a financial drain. Getting out of a late fee cycle means that you’re freeing up even more money.

Second, being late on your bills can damage your credit, which means it may be harder to get loans of any kind, get low interest rates on those loans, get an apartment lease or secure a job.

Third, if you do run into real financial trouble, companies are going to be less sympathetic with someone who has been perpetually late when times were good.

Tackle your bills one at a time. Get yourself up to date on all of them, to the point where you’re able to pay them all on time with some breathing room to spare. Each bill that you get current means fewer late fees, which means it’s easier to get caught up on the others.

7. If you don’t have a bank account or can’t get one, talk to a credit union.

The next step – or even a concurrent step – is to get a checking account or savings account if you don’t have one.

For some of you, this will seem like a shockingly fundamental thing, but the truth is that a lot of people operate outside of the banking system for some reason or another. In many cases, they devastated their credit earlier in life and were simply denied an account from a bank. Others may not fully trust banks.

The thing is, operating in the modern world without a checking or savings account and without a financial institution through which you can deposit checks without paying a hefty check cashing fee or paying a payday loan service. That’s a needless drain on your finances. Plus, without having a bank account, you run a lot of risk just holding onto cash.

If you’ve been denied an account with a bank in the past, try a credit union. Credit unions are typically not-for-profit and were intended to work with the community to help people establish credit. Find a local credit union and go talk to them. Bring along some money for an initial deposit to start your checking account.

Again, having a checking account eliminates a lot of extra fees that come from cashing checks and risks from having all of your money in cash.

8. Build a buffer in your checking account so that you’re not overdrafting anymore.

Many people who do have a checking account sometimes find themselves over drafting the account, meaning that they wrote checks or initiated transfers that exceeded the balance on the account. Some banks will deny that check or transfer; most banks will also charge you a fee for having attempted to overdraft.

Because of this, many people who live a paycheck to paycheck life find themselves sometimes overdrafting their accounts, and that means a consistent flow of overdraft fees, which becomes yet another drag on one’s finances.

If you’re following the other steps in this plan, the next step for you should be to use some of that extra accumulating money to build a buffer in your checking account so that you no longer accidentally overdraft your account. I recommend keeping at least a week’s worth of living expenses in there as a buffer. What does it cost to pay a few of your bills and buy groceries and gas for a week? That’s how much your buffer should be.

Having that buffer in there means that overdraft fees simply vanish, and that can have another enormous positive impact on your financial progress.

9. Build up an emergency fund somewhere.

Steps 7 and 8 might not be relevant to you, but for 80% of Americans, this step most certainly is. You need to have a cash emergency fund somewhere, preferably in a savings account at a different local bank than the one you primarily use.

Do not use a credit card as an emergency fund. I fell into that trap, and I ended up owing a lot of extra interest on my credit card as a result. Not only that, credit cards fail you in moments of identity theft or a lost wallet; with an account at a local bank, you can just show up there and do your business.

The easiest way to build an emergency fund is to make regular small deposits so that it builds up over time. Many financial gurus will tell you to have a certain amount of money as an emergency fund. My personal belief is that you should turn on a slow trickle into your emergency fund and never turn it off. You can do this by setting up an automatic repeating transfer each week. If you transfer $10 a week, your emergency fund will grow to $520 in a year. Make it $20 a week and you’ll have $1,040 at year’s end. You’ll also earn a little interest on that.

I do recommend putting a little extra in there at first to build it up quickly. Rather than moving onto step 10, try to put your extra cash into your emergency fund until you have a couple weeks’ worth of expenses in there at least. You want to be able to survive missing a couple of paychecks. Then, leave the automatic transfer in place and move onto the next step.

If you ever need that emergency fund — when your car breaks down, when you lose your job or when you quit your job — you know you’ll have quite a bit of money waiting for you, and you won’t have to do anything to have it automatically begin to refill itself.

[Read more: How to Build an Emergency Fund]

10. Start knocking down your debts.

If you’ve taken care of those steps, the next thing you need to do is start knocking down your debts.

This one’s easy. Just keep making minimum payments on all of your debts. Then, go through all of them and figure out which one has the highest interest rate and make the biggest possible extra payment you can on it each month.

Don’t go too big, though. If you go too big and find yourself draining your emergency fund or tapping a credit card to make ends meet or falling into your checking account buffer, you’re better off making a smaller extra debt payment.

Over time, you’ll pay off that highest interest debt. Great! Move onto the next one, whichever one now has the highest interest rate, and make big extra payments on that one. Keep rinsing and repeating until the debts are gone.

When those debts are gone, everything changes.

Following these steps will reduce your financial dependence on your job and massively reduce your work stress and your money stress.

If you’ve eliminated late fees, overdraft fees, check cashing fees and interest payments from your life while also getting a better grip on your spending, you are going to be in a completely different situation when it comes to money stress and job stress. You’ll find that all of the money worries you have largely disappeared, and because you’re no longer pushed up to the wall about money, a lot of job stress disappears, too.

For me, I just found it much harder for job stress to bother me once I had my financial life in shape. I knew that I didn’t have to suffer terrible professional treatment and, interestingly enough, that made work far easier to deal with. Overbearing work demands used to scare me and worry me, but when my finances were in better shape, they just had a lot less impact. I did my job, I went home, and if that wasn’t enough, it wasn’t my problem. The thing is, that actually made my job performance a lot better while making my life a whole lot less stressful.

You can do this. The steps are right there waiting for you.

Good luck!

We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.

Trent Hamm

Founder & Columnist

Trent Hamm founded The Simple Dollar in 2006 and still writes a daily column on personal finance. He’s the author of three books published by Simon & Schuster and Financial Times Press, has contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and his financial advice has been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.

Reviewed by

  • Courtney Mihocik
    Courtney Mihocik
    Loans Editor

    Courtney Mihocik is an editor at The Simple Dollar who specializes in personal loans, student loans, auto loans, and debt consolidation loans. She is a former writer and contributing editor to Interest.com, PersonalLoans.org, and elsewhere.