How To Save Money when Living Paycheck to Paycheck


Are you tired of barely scraping by every month?

Are you constantly worried about how you’re going to make ends meet until your next paycheck comes?

If so, you’re not alone.

Millions of people are living paycheck to paycheck.

But just because this is the reality for many people doesn’t mean that you have to accept it.

There are ways to save money even when you’re living on a tight budget.

If you’ve ever asked yourself, how can I save money when living paycheck to paycheck, this post is for you.

I’ll walk you through 17 steps to make saving money a reality and finally take control of your finances.

How Can I Save Money When Living Paycheck To Paycheck

#1. Change Your Mindset

save money when living paycheck to paycheck

The very first thing you need to do is change your money mindset.

Too many people view money as a scarce resource.

They think that they can’t save money because they don’t have enough of it.

But this isn’t true.

You can save money, even if you’re living paycheck to paycheck.

It just takes a different mindset.

When you start thinking about money as something that you can save, you’ll be surprised how much easier saving money will become.

Changing your mindset isn’t always easy.

But if you want to start saving money, it’s a necessary first step.

So stop telling yourself you can’t save or you don’t have enough money to save and start telling yourself you do have money to save.

#2. Save Something

The next step is related to the point above.

When I help people with their money, many times they think they need to be saving $100 or more each month.

In an ideal world, you would be saving $100 or more.

But you have to save what your current financial situation allows.

Right now, I save over $1,000 a month.

But it wasn’t always this way.

When I bought my first house and was struggling financially, saving even $25 was a miracle.

Most months I was saving $10.

You need to stop thinking that if you can’t save a lot of money then saving isn’t worth it.

If all you can do is save a small amount of money, then do it.

It is worth it because you are creating a habit.

If you save nothing now, when your finances improve you probably won’t save anything then either.

You need to develop the habit.

So make it a point to save something every month.

It doesn’t matter if it is $5 or $10.

Just make it a habit to start saving.

#3. Pay Yourself First

Here is another mistake I found many people make.

They wait to save until the end of each month.

It doesn’t take a math whiz to know if you have nothing to save you aren’t going to save.

Instead, you need to save first.

When you get paid, save $10 right then.

This guarantees you will save money.

You might be saying, but if I save first, I won’t be able to pay my monthly expenses.

This isn’t true.

Here is what is going to happen.

You save first and then you will pay the bills you have to pay, like your rent or mortgage, utilities, etc.

As the month comes to the end, you will see how much money you have left to spend and will decide what is most important and what you can go without.

It is the exact same thing you do now.

The only difference is you have $10 less to spend and $10 more in a savings account.

And speaking of savings accounts, if you don’t have one, you need one.

You can’t save money in a checking account because you will be tempted to spend it.

If you have online access to your back, you should be able to open an account online.

If you don’t have any bank account, below are some great options to consider using.

#4. Automate Your Savings

One of the best ways to make putting money away easy is to make it automatic.

This means you don’t have to think about it or even do it, it just happens.

Luckily with most bank accounts you can set up an automatic transfer.

Just log into your account and set the date and amount of the transfer.

Then every month going forward, money will be transferred to your savings account.

Another option is to talk to your employer.

If you use direct deposit, most employers allow you to split your paycheck between two accounts.

You can either say you want to have $10 go into your savings account from each paycheck and the rest to your checking account, or you can use percentages.

The benefit of using percentages is that as you earn raises, you will automatically save more money.

For example, if you make $40,000 and save 2%, you put $800 away annually.

Next year, assuming you earned a 3% raise, you will save $824.

You are still saving 2% of your income, but because your income grew, so too will the amount you save.

#5. Review Your Spending Habits

how much money should you keep in your checking account

The next step to save money when living paycheck to paycheck is to review your spending.

Download a few months of bank statements and credit card statements and scan through them.

Do any charges surprise you?

Maybe you see you are spending a lot more eating out than you thought.

Or maybe there are subscriptions you are paying for that you no longer use.

With this information you can begin to work to reduce some of your spending.

Cancel unused things you are paying for.

Cut back on areas where you are overspending.

Now you have freed up some extra money every month.

This money can be used to pay down debt or you can put a little more away each month.

To make this process easier, you can use Rocket Money.

This automated service will review your spending and alert you to bills to cancel.

You can even get Rocket Money to cancel for you or even negotiate bills on your behalf.

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#6. Reduce Dumb Fees

When scanning through your spending, pay attention to dumb fees you are paying.

Maybe you have late fees or overdraft fees.

There are all sorts of fees you get charged that you can easily avoid.

When you spot these fees, create a plan to avoid paying them in the future.

For example, if you are sometimes late on your bills, make it a habit that when the bill comes in, you pay it, or at least automatic payments with your bank or the company the bill is for.

This 5 minute hack will save you hundred if you are late on a regular basis.

#7. Actually Save Money

Here is another trick I came up with when I was struggling financially.

I was making it a habit to reduce my spending as much as possible and was succeeding with it.

But a few months later, I still had nothing in my savings account.

This is because even though I was saving money, I left the money in my checking account and ended up spending it.

So I created a new habit.

When I would go grocery shopping, at the bottom of my receipt, it would show me how much I saved from sales and coupons.

When I would get home, I would put away the groceries and then jump online to transfer the cash I saved to my savings account.

This worked out so well, I started doing it every time I spent money and saved.

#8. Make A Debt Plan

If you are in debt, you need to get out as doing so will free up extra cash every month.

For example, if you are paying $800 in student loans and an auto loan, paying these off can completely change your monthly finances.

So take some time to make a plan.

The best is the debt snowball.

List out your debt payments from smallest balance to largest.

Then look at how much money you can put towards your debt each month.

Pay the minimum monthly payment on all your debt except the smallest balance.

Put all the money left over.

Do this until that debt is paid off.

Now restart the process with the next smallest debt.

This plan keeps you motivated to get out of debt because you see progress quickly.

Then when you are out of debt, you can start putting that money towards savings.

#9. Create Goals For Yourself

target date funds pros and cons

Another easy way to save money when living paycheck to paycheck is to set goals for yourself.

When you have something to work towards, it is easier not to spend frivolously.

So sit down and make some short-term and long-term financial goals.

For example, maybe you want to save $2,500 for a vacation.

Set this goal and then keep it visible so you are reminded of it.

This helps you to remember it when you go and spend.

You will ask yourself, would I rather have this item or have more money for my vacation?

Chances are, you will put some of the things back because reaching your goal is more important than the item you were thinking of buying.

And when this happens, remember the tip above about transferring the money over to your savings account.

#10. Set Up Milestones

To make your goals more attainable, use the trick of setting up milestones.

This is simply saying to create smaller goals along the way.

For example, saving $2,500 might sound impossible when living on a tight budget. Instead of focusing on that big number, try to save $500.

When you reach this milestone, celebrate.

Maybe you buy yourself a pizza or treat yourself to a manicure.

You can do anything that excites you as long as it doesn’t hurt your finances.

And don’t think you need to have $500 as your milestone.

If you want $200, the use this amount and celebrate when you hit $200, then again at $400, and so on.

#11. Track Your Spending

Earlier you reviewed your spending. Now it is time to take it one step further and set up a monthly budget.

The biggest issue with a budget is people think it restricts them from spending money.

In reality, all it does is helps to guide you to spend money the way you want.

So if buying healthy food is your thing, you can budget more money towards this category and have an eating out budget close to zero.

You decide how you want to spend your monthly income so you can enjoy life today and reach your financial goals in the future.

And budgeting doesn’t have to be hard.

Many people love the 50/30/20 rule where you put your money into 3 general buckets and spend or save accordingly.

Others like the idea of using software like Tiller Money.

This budget app automates the process of entering transactions for you.

All you have to do is assign a category and you are done.

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I encourage you to give budgeting a try with your new money mindset and see how it can help you reach your financial goals.

#12. Increase Your Income

Up until now we’ve been talking about limiting your spending and saving a little something each month.

But something else you should consider doing is increasing your income.

When you have more money coming in, you have more wiggle room and can save more.

Or you can put more towards your debt, which will eventually allow you to save more as well.

There are a few ways you can increase your income.

The easiest is asking for a raise at work.

If you feel confident in your skills and have a good track record, ask for a meeting with your boss.

Come prepared with statistics that show how you’ve helped the company as well as what you would like to see in the future.

This works more times than not.

And when it doesn’t work, you have the information you need to add to your resume to help you stand out as you interview for a new full-time job.

Another way to increase your income is by picking up a side hustle.

This can be a part-time job or even working as a freelancer.

The options are endless and you can work on the side without affecting your current employment.

If you decide to go this route, here is a trick I used to help me financially.

When I was trying to dig myself out of high interest credit card debt, I took a second job.

All the extra income I earned from this job paid down my credit cards.

I didn’t use the money for any other purpose.

Then I took the money from my full time job and budgeted it as if the second job didn’t exist.

I set it up so I had a certain amount going towards my credit card balance as well.

This plan helped me to wipe out my debt a lot faster than I otherwise would have.

#13. Sell Stuff

This tip has a couple benefits, both of which are huge.

First, by selling things you no longer use or need, you get a small income that you can use to put towards your savings.

While you won’t make a ton of money, as you saw earlier, the habit is more important than the amount of money.

But arguably even bigger than this is you see the dumb things you wasted money on.

While not all of the things you no longer use or want were dumb purchases at the time, but many were.

By seeing these things, you can learn how you wasted money and how your financial life could be in better shape.

When I was in credit card debt, the first thing I did when digging out was to take all the things I bought on credit and pile them on my bed.

Then I took a picture and carried it around with me as a reminder.

I would see that pile of stuff, most of which I never used, and know the financial stress and emotional pain it is causing me.

It helped me to question many things before I bought them and this helped me to buy less stuff, saving even more money.

While you don’t have to carry a picture around with you, at least go through your things and then take a few minutes to understand how buying that stuff put you in the situation you are in now or helped to keep you there.

Then make a promise to yourself to be better going forward.

#14. Bank Windfalls

woman windfall of money

We all get windfalls from time to time.

Maybe you received a tax refund, earned a bonus at work, or won a small lottery.

Whatever the source of the money, make it a point to save a portion of it.

I like to encourage people to save the majority of it in fact.

Take 80% and save it or pay down debt and spend the other 20% however you want.

For example, if you get the average refund of $2,800 you would take $560 and spend it however you want.

Then the other $2,240 could go towards some combination of debt pay down and savings.

Because of the large amounts of money from a windfall, if you make it a point to save a portion of them, you can quickly provide yourself with some financial security.

#15. Set Up Separate Savings Accounts

One mistake I see a lot of people make, regardless if they live on a paycheck to paycheck cycle is they only have one savings account.

While it is important to have an emergency fund to cover unexpected expenses, you need other accounts for all of your other savings goals.

This way, you can see the progress you are making all the time.

If you just had one account but were saving for multiple goals, you would have to keep track of how much you had for each goal.

Make your financial life easier and increase the odds of reaching your financial goals by having separate accounts for each of your goals.

#16. Stay Positive

As you work to break the cycle of paycheck living, know that you will encounter setbacks along the way.

There will be car repairs that come up that eat into your savings or other expenses you have to pay.

The key here is you have to stay positive.

Don’t get discouraged when this happens.

Keep pushing forward, knowing you are on the path to financial freedom.

I get that it can be frustrating to work hard, make some progress, and end up back where you started.

But the good news is if you can keep with it, you will see progress.

So work hard to keep negative thoughts at bay.

One trick I like to play is just to imagine my life in 5-10 years and how much better it is.

This helps me to push any negative thoughts to the side and get me back on track.

#17. Review Annually

Finally, you want to make it a point that every year you review your finances.

Look over your expenses like you did before and see if there are any new subscriptions or charges you no longer use or want and cancel them.

You might even want to use Rocket Money again to see if it can lower some additional bills for you.

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If you started off saving a set dollar amount each month, see if you can increase it.

Before you say you can’t, know that you can.

Increase the amount $5 or $10.

Nothing crazy here. Just a little bit to help your savings grow faster.

Next review your budget.

See if your priorities changed and you want to spend more money in a certain category and less in another.

This is also a good way to see if you are falling victim to lifestyle creep too.

Finally, review your short term and long term goals.

Are they still goals you want to try to achieve? Do you have new goals you want to try for?

Final Thoughts

If you ask yourself how can I save money living paycheck to paycheck, you now know how.

Using these 17 tips, you can make small changes that will help you start building up your savings and improve your finances so that you will no longer be struggling to survive.

Plus they will give you peace of mind knowing you have something in the bank to help you avoid financial disaster.

Just know that change doesn’t happen overnight. It takes time and you need to be patient.

But most of all, you need to take the first step and actually make an attempt at trying to improve your finances.

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