How to Save Money When You Live Paycheck to Paycheck

Saving is hard even in the best of financial circumstances. It’s even harder when you’re living paycheck to paycheck or just starting out your career on a tight salary and budget. A savings account with a little emergency fund should be one of your first financial goals, however, because it starts building that “savings” muscle and momentum for your larger money objectives. It takes discipline, but it’s not impossible to get even $1,000 of savings under your belt if you’re living paycheck to paycheck.


1. Start With Your “Why”

If you’re hoping to start a savings strategy when things are a little strapped, you’re going to need more motivation than someone just telling you it’s a good idea. Start with really spending time understanding your why. Maybe you want to be able to feel more stable in case of an unexpected expense. Or maybe your savings will help get you on the road to a bigger goal, like saving for that dream vacation, a down payment for a house, or starting a family. Once you’ve got a firm reason in your head and heart, it will make it that much easier to envision your end goal when you need to make small, but sometimes difficult little sacrifices along the way. We use this goal strategy in plenty of other areas of our life and it definitely applies to finances too!



2. Start a Fresh Slate

One of the best ways to hit the reset button on savings goals is to start fresh. Open a new savings account (even better, pick a new bank to do it at.) Sometimes having a separate bank for your savings goals can make it a bit more “difficult” to just quickly move money from savings to checking. Don’t yet have the cash to plunk down for an opening deposit? Go the manual route and start scraping together change. You really will be surprised at how quickly you can amass even a small opening deposit to get yourself saving in the right direction.


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3. Scan Your Bills Like An Analyst

If you’re living paycheck to paycheck, you’ve very likely already got a budget in place and are savvy about where your money goes. (And if you’re not there yet — planning a budget is one of the best ways to start to “make room” in your finances.) With a budget in place, you’ll need to take it a step further.

Go through each of your monthly bills and truly look to understand them. Once a week, pick one of your recurring bills and make a call to the company. Credit card’s up first? Ask about a lower rate if you have great credit or have been a client for a long time. Does your auto insurance get paid on autopilot? Give them a call and ask about what discount programs or credits are available. Put in a little extra effort to shop around and find the greatest rate. Have you analyzed your health insurance spending in previous years? You might be able to get away with a different structured plan that has a less expensive premium if you find you’re not routinely using those services.

Yes, this kind of research is a time cost. But over the long run, you can divert those dollars to your more important savings goals. The trick is to be sure that you’re using that extra cash deliberately toward saving and not letting it sneak into other discretionary spending.



4. Pay Yourself First

We’ve heard this one time and again, but it really is the first rule of saving. Pay yourself first makes sense for a few reasons. One, if you start way up the finance food chain, your first “self-pay” moment should be contributing to your 401k savings program through an employer or any similar retirement savings plan they offer. It really is one of the most essential contributions you can make to your financial well-being over the course of your life. And, since this type of savings comes out of your gross pay, you definitely won’t miss it in the same way you would if it were coming directly out of your net paycheck.

The second part of “pay yourself first” is really about training your brain to save and making it a habit. That means that even in the trickiest of times when the paycheck is the tightest, do your best to still find something to save. Those two weeks it can even be a symbolic dollar in the piggy bank. The simple act of committing to yourself in this way helps foster a savings routine so that as your financial situation improves, you’re already on the right track.



5. Find Other Income Streams

There are two sides to every income equation — saving and earning! If at the end of the day you’ve done everything you can to squeak savings out of your current income, it may be time to consider additional income streams.

While that may be the obvious advice, this may be the less obvious part. The side hustle or Friday night babysitting gig doesn’t have to last forever and it doesn’t have to mean something monumental for your career or life choices. Sometimes we can get caught up in the ego of feeling like our primary job should be “enough” and that taking on a second stream of work has to be something really profound to be worth it. (Little secret, before side hustles got a branding makeover they were just called second jobs.) So, if you’re ready to make a serious dent in your savings goals and the day job isn’t cutting it, consider how you could add something temporary to your work world to boost your income.






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This post was originally published on May 30, 2018.

  • FinanceGuru

    I recommend the book “An Engineer’s Attempt to Explain Personal Finance” as a means to dive into Item #3 further. Explained in Chapter 5 is the “Cash-Flow Analysis,” a way to better analyze and manage your budget since it takes into consideration the variability of one’s bills each month. There is also a chapter that discusses the long-term damage created by financing every-day purchases, and why it becomes tougher to make ends meet.

  • My biggest tip is to advocate on the local and national level for equal pay and better wages. It is my firm belief that a full-time job should absolutely be enough to cover the cost of living and then some. No one should feel like they have to take on a second job and burn themselves out to scrimp together a small amount of savings. I know *I* don’t have the energy for that – I already work 50+ hours a week at my day job – and I’m sure others may not have the energy or stamina either.

    Do what you can with what you have, absolutely, but we should all be fighting for equal pay and fair wages.

    On The Cusp |

    • connie

      I don’t agree with equal pay because some people have higher pay due to many reasons. They probably have a higher education or more work experience. It’s hard to say how much is enough for one’s daily necessities as everyone’s different. The govn’t can raise minimum pay to a certain amount but keep in mind that employers might have to lay off people as they can’t afford to pay for that many employees. Businesses will raise their prices and cost of living will go up. As time goes by, people that’re earning minimum wages will never be satisfied and they’ll demand more so it’s a vicious cycle.

      It’s also hard for mid salary range people to sustain a living on their own without sharing the cost with a partner due to high living expenses depending on where you live. I also strongly believe that poor people are poor for a reason due to their mindset and intelligence. For example, I see many homeless people buying expensive coffees at Starbucks or spending it on useless things such as substances. I also see many low salary range workers shopping at pricey grocery stores just for conveniences or they like to eat out all the time.

      So if you demand equal pay for everyone, that absolutely won’t work cuz everyone’s different and what’s considered equal is different for everyone.

  • A few months ago I had no savings in my account then I followed just 3 steps and now I have saved a huge amount.
    1. Open a new bank account and make an initial deposit
    2. Analyze your bills
    3. Create a new income stream

  • lalaroze2012

    Finally. I find something more my pace & keep to go back & read later.

  • Natalie Redman

    Great post! Finding other income streams is a must. Never settle with just your paycheck being the be all and end all!

  • M. Meowerson

    Thanks so much for providing realistic financial advice! I feel like every other savings article out there just says “stop buying coffee” when the reality is many millennials today don’t even have the extra money for that in the first place!