How to Save Money Living Paycheck-to-Paycheck

Living paycheck-to-paycheck is a really tough financial situation. And, to save money living paycheck-to-paycheck is an even bigger struggle. 

We know. We’ve been there. 

It feels like there isn’t any money left over after bills for fun stuff.

And, forget about saving money or paying off debt faster. 

So, what can you do to save money living paycheck-to-paycheck? 

First, you have to evaluate your financial situation.

Review Your Income and Expenses

Go grab a paystub and calculate how much money you make every quarter (3 months).

Next, look at your expenses for the last three months.

Categorize each expense as either essential or nonessential. Check out our post if you need help organizing and categorizing your spending.

Once you know how much money you make and how much you spend on essential and nonessential expenses, you can choose the best course of action. 

If you’re spending over 60% of your income on essential expenses you’ll need to figure out how to make more income or spend less on those essential things like housing, groceries and other basic other necessities. 

Either way, you need to make some big life decisions.

If you’re spending most of your money on nonessential expenses, there’s good news.

You can make some changes and start saving pretty quickly.

Let’s go through each of these areas.

Dealing with High Essential Expenses

Other than being burdened with a lot of debt, spending most of your money on essential expenses is the toughest financial situation.

That’s because it can be difficult to just make more money or spend less on essential items.

However, it’s worth spending time figuring out a plan for doing at least one, if not both.

Make More Money

We’re not talking about doing some surveys online or some other online money-making gimmick. 

If you want to make more money so that you can save money living paycheck to paycheck, you need to figure out how you can provide value.

Our time is worth a certain amount of money depending on the skills we can offer during that time.

Spend some time and write down everything you know how to do. 

Even if it’s something as small as cleaning a home, it’s valuable to someone else who doesn’t have the skill or doesn’t have the time.

Use these skills to make extra money. 

We’ve thought of some ideas to help get you started. Check out our post on ways to make money in your free time. 

Cut Down on Essential Spending

First, if you have high essential expenses, go through them again with a fine-toothed comb. 

Are the Cheetos you bought with your other groceries actually an essential expense?

You may be buying stuff that feels like it is essential (food) but it really isn’t because it’s a luxury. 

Yes, Cheetos are a luxury. 

If you’ve made sure all of those expenses are truly essential and it’s still a big portion of your income, you have to consider how you might change those essential expenses.

Maybe moving will lower your housing expenses. Or, taking public transportation will reduce transportation costs.

Are you spending too much on insurance for your actual insurance needs?

Think about the big picture too.

We moved to an apartment that cost a lot more but we were able to walk to work, saving us money in the end.

After cutting as many essential expenses as possible, you have to focus on those nonessential expenses.

Dealing with High Nonessential Spending

This is the point where we tell you that you might not actually be living paycheck-to-paycheck. 

If you’re spending a lot of your money on nonessential expenses, you’re just overspending your money.

Time for some tough love.

It can be difficult to change how much money you make. 

But, in comparison, it’s much easier to change how much you spend on nonessential items.

So, if you’re spending too much on going out, new clothes, random stuff (always a killer) it’s time to create a budget.

Another, thing to do is try to do a no-spend challenge. 

You’ll realize how much money you’re spending that you could have been saving. 

Other Ways to Save Money Living Paycheck to Paycheck

All that above was about the basics.

If you can get the basics right, you’ll be in good shape to start saving money.

However, there are other things you can do to save money living paycheck to paycheck.

Focus on Paying Off Debt

Debt sucks.

No, it’s literally sucking extra money away from your bank account.

Every month you have to pay interest on that debt.

Instead of paying those interest charges, you could be saving that money.

If you can pay off your debt, you’ll have freed up money that you can now save.

Learn about how to pay off your debt in the following posts:

• How to Get Out of Debt | 5 Steps to Pay Off Debt
• How to Pay Off Debt and Save Money at the Same Time
• How We Paid Off Over $100,000 of Debt in 1 Year

Additionally, sign up for our resource library which includes some great worksheets on paying off debt. 

Create a Priority-Based Budget

When you’re living paycheck-to-paycheck, a good way to save money is by making it a priority before everything else.

We created a different way to budget where you prioritize each dollar.

Using a priority-based budget, you go through each of your priorities assigning the smallest amounts first. 

That way you can save money, pay off debt and actually enjoy your life too.

Instead of saying you’re going to save $300 and spend $200 on entertainment you say my first priority is saving $100. The second priority is spending $50 on entertainment. 

You go down the list until you’ve run out of money. 

Final Thoughts 

If you want to save money living paycheck-to-paycheck, something has to change. 

Maybe that’s something big like changing where you work or where you live.

It could be smaller but still big like cutting back on your nonessential expending. 

Or, it could be as simple as prioritizing saving money first.

Whatever it is, it’s going to be a challenge. 

Change is always a challenge.

The question is are you up for it?