How To Save Money While Living Paycheck to Paycheck

Are you living paycheck to paycheck? Do you want to stop the awful paycheck to paycheck budget? Learn exactly what to do on Hint: There are other ways than skipping lattes.Living paycheck to paycheck is flat out stressful.

Stretching your last $20 bill until your next paycheck hits your bank account on Friday is an enormous challenge when you need gas, groceries and your kid needs money for a field trip on Thursday.

While it may seem impossible, you can save money while living paycheck to paycheck.

In fact, saving money is exactly what will get you out of the paycheck to paycheck lifestyle. So, what can you do to save?

Here are four ways how to save money while living paycheck to paycheck and a guide covering what to do with the money you save.

Pay Yourself First

The easiest way to save money when you’re living paycheck to paycheck is to pay yourself first.

You can accomplish this a few different ways, but I find it is most effective to have your workplace split your direct deposit into two parts.

The first and largest part will go to your checking account, as always, while a second smaller portion will go directly into a savings account you vow to never touch. I personally like using an online savings account, like Capital One 360 (read our review here), so it makes it harder to get the money for splurges.

If you don’t have direct deposit at your work, you can manually do this when you deposit your check at your bank or set up an automatic transfer to take money from your checking account to your savings account a couple days after you normally deposit your paycheck.

If you don’t have a bank account at all and keep all of your money in cash, I highly suggest you get a bank account that charges no fees at your local credit union. However, if that is not an option, take set amount of cash out of your paycheck after you cash it and put it in a safe place that you promise you will never touch.

Sell Things Around Your House

Once you start paying yourself first, you can accelerate your savings or supplement your income by selling things from around your house. Start out by going through your home and making a list identifying anything that you might be able to sell for a decent amount of money.

Next, look at the list of items you compiled and see what is unnecessary. The best way to do this is think about how often you use the item versus how much cash you could get by selling the item. Which is worth more to you?

Then, list the items for sale on websites like eBay or Amazon or have an old fashioned yard sale to free up some cash from your unused or underused items.

Take this cash and add it to your savings and you’ll be well on your way to escaping the paycheck to paycheck lifestyle.

Grow Your Income

While selling items from around your house is an awesome way to raise cash, it is only a temporary measure. In order to continue to have more money available to save every paycheck, you need to grow your income.

Many people assume you can only make more money by getting a raise at work, which is just simply not true. Instead, you can start a side hustle to grow income on the side.

Of course, you can try to get a raise, work more hours, earn overtime or find a new, better paying job. Since most of your income likely comes from your day job, it makes sense to try to maximize it as much as possible.

However, don’t discount the idea of a side hustle. Many side hustles end up growing into full fledged businesses that end up earning their owners more than they make at their day job.

Related: Get Job Loss Insurance By Starting A Side Hustle

Cut Back On Certain Expenses

Growing your income is awesome but the extra money may not start rolling in immediately. That’s why it is important to begin cutting back on expenses that are excessive. Begin by tracking your spending.

The easiest way to do track your spending is to gather all of your bank account statements and credit card statements and categorize the transactions for the past month.

Once you have a list of your spending, look and see what looks unreasonable. Does it really make sense to spend more money eating out at restaurants than you spend on groceries? Does it make sense that you spend more on your car than you do for you rent every month?

Find areas where your spending does not align with your values and cut those expenses. Then, take that money you don’t spend and put it in savings. If you don’t, you’ll accidentally end up spending it somewhere else.

Related: 123 Money Saving Tips 

What To Do With Your Savings

Saving money is great, but what’s the point? Once your savings reach the following goals, you can take the following actions with your savings.

Get One Paycheck Ahead

Getting to the point where you have one paycheck in the bank is awesome because you’re essentially one paycheck ahead of the game. When you reach this milestone, you can budget for your next pay period using money from your savings and put your current paycheck straight into your savings account.

This will allow you to know for certain how much money you can spend in the next two weeks without worrying about changes in your paycheck.

Note: Don’t spend all of the money just because you have it. Your goal is to continue to add to your savings.

Get A Month Ahead

The next milestone is to get a month ahead. Once you reach this goal, you can set a budget for the whole next month with money you already have. How awesome is that?

Of course, you’ll want to continue saving so you can reach the next goal, too.

Build An Emergency Fund

Never want to live the paycheck to paycheck lifestyle again? You need an emergency fund. Once you’re a month ahead, try to save anywhere from three to twelve months of living expenses in a savings account. This money will help you weather any unexpected circumstances like a job loss.

If you have a reliable job and no dependents, three months of expenses may be sufficient. However, if you are self employed and have an extremely variable income, you may need twelve months of expenses to feel comfortable.

Related: Everything You Need To Know About Emergency Funds

Digging your way out of the paycheck to paycheck lifestyle can be extremely difficult. Using the four tips in the post, along with the action plan of what to do with your savings, escaping the cycle will hopefully be at least a little bit easier.

Make sure to use the related resources above to supercharge your journey whenever you need a little extra help.

What’s your favorite tip to help people learn how to save money while living paycheck to paycheck? Share your thoughts in the comments below to help others along their journey.

Image by: Images_of_Money Text added by: Lance Cothern

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About Lance Cothern

Lance Cothern, a Certified Public Accountant (CPA) licensed in the Commonwealth of Virginia, is the founder of Money Manifesto. You can read more about him here or connect with him on Facebook, Twitter, Google+ or Pinterest.


  1. Cutting expenses was the first thing we were able to do to help break the pay check to pay check cycle. We tracked our spending for a month saving every receipts to see where our money was going. Once we knew it was easy to make decision on what to cut.

  2. I’m doing a lot of these, but I would really love to try to get one month ahead so I can start to live on the prior month’s income instead of living paycheck to paycheck. In order to do this I’ll need to save and try to increase my income, because I feel that I’ve cut my expenses as much as I possibly can.

  3. Paying yourself first is a GREAT way to get some money saved each month. We’re starting to apply this strategy ourselves too (husband proposed he’d save 25% of his income in our daughter’s account) and it’s proven fruitful. One month has passed and he was able to save quite a bit.

  4. Excellent points! I agree. My wife and I have been applying all these tips and feel we’re definitely on the right track!

  5. sally hernandez says:

    awesome tips as I’m desperate to get control of my income/spending (ie: manage it better). I love love the feeling of actually paying something in advance. So tired of late notices/charges and disconnect threats. Looked at some of your spreadsheets. What I am looking for (not too good at excel) is one that will allow me to do a 3-month spreadsheet that I can plug #’s into as I have “regular” bills and a few of them change $$ monthly. I have a rather archaic hand written spreadsheet that lists paydays and then I try to estimate my monthly bills and divide them each pay period. I have envelopes with each bill so that 1/2 of the bill would go in the envelope until the next payday when the bill would be paid. I downloaded your Monthly budget and like it but I do better with a 3 month picture 🙂

    Any help would be appreciated. I think your site is AWESOME!!!!!!

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