How to Save Money When You’re Living Paycheck To Paycheck

There are many people living paycheck to paycheck without saving money…and if you’re reading this, you probably do, too!

Cheers to you for wanting to break the cycle of living beyond your means! 

Money is…tricky! And saving money when you’re living paycheck to paycheck never feels like a priority. 

Sadly, you’ll always just barely make ends meet if you don’t have savings to fall back on. (See what I mean by tricky?)

I’m super thankful that I was taught about money from a super young age. I always had an allowance or birthday money to spend on whatever I saw fit after I put money away. 

I remember being four- and five-years-old dividing 50% of all holiday money into an account for college and/or whatever my future self felt was most important.

Of course, at four- and five-years-old I wasn’t paying for my car loan, my student loans, rent, insurance, etc. so saving 50% was reasonable and I could still afford all the Barbie clothes I wanted…and trust me…I did. 

Not only that, but money was a continuous conversation, especially as I became a teenager and had my own job. 

Today, I’m incredibly thankful that my current job and living situation allows me to save roughly 35% of my income, but that is obviously not the case for everyone. 

It is most often recommended that you should save 20% of your income.

Is that always possible? 

Absolutely not. 

I’ve said it before and I’ll certainly say it again… 

In order to save money, you need to evaluate your budget!

You’ll never know how much you can afford if you don’t break down your budget first…even if you’re living paycheck to paycheck.

Here’s my FREE mock budget spreadsheet by clicking here.  

Fill in your needs first. Then, savings. Your wants should be filled in last. 

Needs should consist of non-negotiables: your rent/mortgage, car payment, insurances, etc.

Savings should be 10-20% of your income, but anything is better than nothing. Setting up automatic weekly payments into your savings account is the most helpful way I have found to save money constantly. 

Wants should consist of things you can live without: vacations, dinner out, etc.

When you flesh out your budget, you are more likely to see what can be saved as extra. 

Now that you’ve evaluated your budget, it’s time to…

Set Savings Goals

After you determine how much you can save, it’s time to determine what you should be saving for. 

I’ve found that having separate savings accounts for each of your goals helps to avoid confusion and overlap. 

I also recommend having high-yield savings accounts for all your savings goals. 

High-yield savings accounts have high-interest rates that can be put into the account. There’s literally no reason not to have an HYSA! LET YOUR MONEY WORK FOR YOU!

Here are my savings goals and the percentage of my income I put away each week:

Future House: 15%

Emergency Fund: 10% 

IRA Investment Portfolio: 10%

Any remaining money at the end of the month should be deposited into the account with the highest savings goal. For example, if you’re working towards building an emergency fund, that should be where your extra money goes. 

Find Extra Money

That extra money each month is most often found money.

It may be your holiday bonus or a birthday check from your mom. But, it also could be the percentage difference from refinancing your loans or the amount you would’ve spent on those useless streaming subscriptions. 

If you’re a student, that could mean asking for a student discount on things like takeout or insurance. 

At the end of the day, you were capable of living without that extra money in the first place so you might as well put it away. Future you will thank you!

Good luck on your journey of breaking the paycheck to paycheck cycle!

You might also like:

• New Year, New Budget: Three Small Goals To Save Money In 2022
• How to Create a Master Budget + Free Printables!

❤️ Kayden