How to Save Money While Living Paycheck to Paycheck

how to save money while living paycheck to paycheck

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Only a few months ago, I was just like so many — I had little, if any, money in my savings account. I was one unexpected car or medical bill away from financial ruin. Finally, I was fed up and told myself, “I’m sick of this.” I wanted to ditch the paycheck-to-paycheck cycle, save money, and begin my path towards financial freedom.

The neat thing is that I didn’t change any of my circumstances. I didn’t go out and get a higher-paying job. I didn’t have time for a second job, even if I wanted one. Instead, I focused on changing my habits and my spending. But I wanted to make sure it was attainable and not overwhelming.

I know myself well enough to know that if I place a mountain of a goal on my shoulders, I’m setting myself up for immediate failure. Instead, I broke my goal up into easy, achievable mini-goals to work my way to success, which you too can follow.

Open a new bank account, and make a small depositsave-money-living-paycheck-to-paycheck

You may be asking yourself, “Hold on. I already have a savings account (albeit an empty one). Why do I need a new one?”

I needed a fresh start. A clean slate. Trying to save money under my existing accounts just felt hopeless. Anytime I saw extra money in my account, I would think to myself, “Sweet! I’ve got money. Let’s go to dinner.”

Open a new a new account — preferably one that’s difficult to access, such as an online bank account. Then, make an initial deposit of $5.

Pretend your new bank account is like going on a diet. If you’re trying to lose weight, every time you step on the scale and see the numbers go down, you get invigorated. It motivates you to work harder, because you saw a small win.

Your bank account is the same way. Watching the numbers increase on the screen will keep motivating you to push forward.

Configure direct deposit

This is one of the easiest steps you can take to achieve your goal. Have you ever heard the saying, “Out of sight, out of mind”? We’re going to automate this process, so you never have to physically “touch” the money.

Once your new savings account is set up, allocate a small amount of your paycheck (think $10/week, or $25/paycheck) into your new account via direct deposit. With each passing week, money will be deposited into this account for you, slowly racking up your savings without you having to do anything.

But you may be saying, “Wait! I can’t spare $25 from my paycheck!” Sure you can. You might have to go out to eat one or two times less this week, but you’ll survive. And you know what? I bet you’ll hardly even realize that your paycheck is slightly smaller.

It’s human tendency to spend everything we have. By setting aside $25 first, and spending the rest, I’ll venture to say you won’t even notice the difference.

Analyze your bills to see where you can save

Next, we’re going to see where we can squeeze some money out of the additional bills you already pay every month.

Car Insurance – I saved nearly $60/month by switching car insurance companies! I have the exact same coverage, but cut my rates significantly by going elsewhere. Especially if you’ve got a clean record, and you’ve been with your same insurance company for a while, I bet you can find cheaper elsewhere.

Car insurance companies slowly hike your rates up every year. If you haven’t switched in a couple years, you’ll absolutely be able to save some money by going over to a different company.

Credit Cards – As we begin our financial journey, chances are we have credit cards. I once had a credit card with interest rates of 22%! It was insane. I had decent credit, and decided to shop around.

I found a credit card with an 11% interest rate. And, not to mention, they had an introductory rate of 0% for 12 months. On top of that, they were able to transfer my balance (i.e. pay off and cancel my old card) for free!

I cut my interest rate in half! Take a look through all of your bills and ask yourself, “Can I get this cheaper elsewhere by switching?”

Now, here’s the trick — once you get your payments lower, start placing the difference between what you were paying and what you’re now paying in your savings account.

Say we were paying $110/month for car insurance. After switching companies, you may only be paying $90/month. Rather than spending the extra $20/month, take that difference and put it in your savings account. You were already paying the full $110 previously, so just pretend you’re still paying that SAME amount, but stashing the difference away for a rainy day.

Create some side income

Now that we have the fundamentals in place and out of the way, let’s start thinking of ways we can quickly increase our income by $50/month or so. Sure, you could go out and get a second job, but everyone needs some down time. Remember, these are supposed to be easy.

Internet Surveys – There are companies across the internet that will pay you to take surveys on the internet. It’s not going to be substantial, and it won’t replace your day job, but you can make an easy $20-30 here and there.

Watching one hour less of Netflix or TV would give you enough time to complete a couple surveys. And! If you really enjoy watching TV, some companies will pay you to watch videos — really! Inbox Dollars is one such company.

Sell things on Amazon, eBay, Craigslist, or Facebook Marketplace – We’ve all got extra things laying around the house that we don’t use. We can easily make $100 or more by selling our un-used items online. We’re so lucky to be alive during the internet era, when it’s so easy.

26 Ways to Earn Extra Money (That Actually Work)

If you’re uncomfortable with selling things online, donate them to Goodwill and get a tax write-off instead.

Keep going!

If you’ve followed all of these, and didn’t spend any of the extra money, in a few months, you’ll have easily earned and/or saved $1,000. That’s no small feat! Great job!

But do you want to know what’s even better? $5,000. By continuing to follow these steps, and by having the self control and discipline to not spend the money in that account, your money will gradually grow, even if you’re barely making ends meet.


Everybody’s timeline is different. Don’t look at others and compare yourself to how much money they make or how fast they may be able to save. Everyone is struggling in different ways.

The quicker you’re able to follow these steps, the sooner you’re be able to save. I’m not sure about you, but by having a little nestegg of money set off to the side, I felt more confident about the uncertainties of life. I wasn’t terrified by the bills piling up in my mailbox.

The biggest mistake I made was never getting started. For years, I saw it as such a daunting task that I just felt overwhelmed and didn’t even begin. Start now, and reap the fruits of your labor sooner rather than later.


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