How To Save Money Living Paycheck To Paycheck: 6 Easy Steps To Do

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how to save money when living paycheck to paycheck 6

Saving money while living from paycheck to paycheck seems impossible. At least that was how I felt when I first joined the workforce.

I didn’t necessarily feel like I was tight with money because the income that I got fit in nicely with my expenditure…. But if there’s a big expense that I needed to spend in a particular month, I realized that I didn’t have that fund to support.

I’m sure I’m not the only one here who have gone through that phase.

Maybe you haven’t set up your emergency fund yet and you would like to create one but just having difficulties in finding money to save.

What I can tell you is that as you get better with your money, you will definitely find creative ways to save money even with a strict and fixed income.

But if you’re someone who’s like me before, afraid to face the current state of your finances, you need to change your view on money and start building better relationship with your finances first.

Unfortunately, there’s no getting away with it.

That being said, don’t be afraid. I’m going to walk you through the 6 exact steps I’ve personally taken to overcome this and start saving money even when living paycheck to paycheck.

Before we get to the steps, as a millennial, we ought to ask…

More From Me:

Lifestyle Changes To Do To Save Money
Personal Finance Guide To Read Before Investing Anything
Financial Freedom Journey

Why Do We Live Paycheck to Paycheck

Honestly, there’s no shame living paycheck to paycheck when you’re first starting out.

It’s not easy or a given thing to do to save money when you’re still in college. It’s a good thing to do but not many people do it. Me included. I did save thousands in college, but I spent almost all of them traveling after graduating.

So, yes, back to zero.

But once you started working and you didn’t realize that you need a bigger pool of money, it’s easy to fall into the wheel of living from paycheck to paycheck.

To be honest, no one told’s me about breaking the chain. I just thought that once I’ve contributed to retirement, have at least $1,000 in an emergency fund, I’m set. And that’s not true.

You will realize that you will be leaning towards your credit card more and more when you’re in this paycheck to paycheck cycle – and that’s not the ideal way. It’s just so easy to fall into credit card debt when you’re using it so often.

Additional read that I recommend you to do: Broke Millennial: Stop Scraping By and Get Your Financial Life Together (Broke Millennial Series)

That book is full of good stuff. And as a millennial, we more than ever need those info to get our finances in order.

How To Stop Living Paycheck to Paycheck?

The only way for us to break the chain is to set another savings that can still support us without using this month’s paycheck.

What I meant by that;

a) Say your income is $2,000 a month. You will need to save $2,000 first.

b) Once you have a savings of $2,000, use that money to support this month’s expenditure – and leave this month’s paycheck untouched.

c) For next month’s expenditure, use this month’s income to pay and leave next month’s paycheck untouched.

Therefore in each month, you will have 2 funds – your $2,000 fund to pay your expenditure and your $2,000 monthly paycheck.

Instead of only having less than $2,000 a month in your bank account, now you will always have more than $2,000 at any given time.

With this, it’ll be less likely for you to reach out for your credit card for any bigger expense you might need to pay.

But, don’t abuse the money. If you’re spending more this month and taking a piece of next month’s fund, then you will be left with lesser money to spend next month.

Now the question is, how do we actually start saving money when we’re already tight living from paycheck to paycheck..

6 Steps To Save Money Living Paycheck to Paycheck

1. Change your mindset

First thing first, as I’ve mentioned before, you need to get comfortable with money, especially YOUR money.

If you don’t like to see the balance in your bank account, it’s time for you to face the truth. It’s okay, I’ve been there. It’s going to help you in the long run.

Many of us – me included, thought it’s an impossible thing to save more money when we’re already living paycheck to paycheck.

But how about we change that mindset. How about thinking and telling yourself that it is not impossible to do so.

It might be impossible to do it and get it done tomorrow, but definitely not in a year or two.

Tell yourself that it’s not a race and it’s okay to take things slow. Different people will have different financial situations so some of us might be able to save more and have a shorter time period to save while some of us who have dependents and might need a longer time period to have that fund.

Nevertheless, it’s important for us to start regardless how long it’ll take.

Just spend an evening brainstorming and work on the next few steps.

2. Track your expenditure

There’s no way getting around with this.

If you’re not sure where you are currently spending your money, it’s imperative for you to start with this one. You don’t need to do it every single day for your entire year (you could if you want to).

But if you’re not a Type A person, you can do it at least for a month or two to know exactly where you’re spending your money and the patterns of your expenditure.

You can grab my free Yearly Budgeting Template below – it’s exactly the template that I’ve been using. I like to do it on Google Sheet, but if you want to have it on Excel, you are more than welcome to do so.

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3. Make some sacrifices

Once you know where you’re currently spending your money, try looking at each category and make some sacrifices.

It’s not the most fun part, but it’s crucial to save money.

It doesn’t need to be in a specific category say “Personal Shopping Spree”, it could be just reducing your grocery spend from $400 to $300. Perhaps learn how to do couponing or create a meal plan so that you won’t waste food and money.

I truly believe in meal planning to save money on groceries, along with my other grocery money-saving tips here.

Also, don’t forget to negotiate your bills. I learned a lot from Ramit Sethi on this, and if you want to learn more on how to do this too, you can check out his book: I Will Teach You to Be Rich, Second Edition: No Guilt. No Excuses. No BS. Just a 6-Week Program That Works

There will always be ways and rooms for you to make sacrifices – I’ve sacrificed bubble teas, guys. So be creative!

But don’t cut everything in your life, give some room for you to have fun as well. Instead of cutting bubble teas out of my life, I just let myself buy one every week instead of 3 cups a week.

I still get to have something that I like – but in moderation 😊

4. Budget your money

Once you know where you want to make your sacrifices, it’s time for you to give a budget for your next month’s expenditure.

If you want to lower down your grocery spends from $400 to $300, then use my Yearly Budgeting Template and put the budget amount in the grocery category.

And as you buy groceries, you just need to put in the numbers so that by the end of the month, you’ll know exactly how much you’ve spent and whether or not it’s within your budget.

If it’s within your budget, then congratulations! If it’s not, then find a common ground. Perhaps reduce it to $350 instead of $300.

This is why tracking your expenses is crucial especially in the beginning. And I do think that with this budgeting money exercise, it’ll be very helpful to the relationship you have with your money as well!

I have a couple of posts here on how I track my expenses and how I created my budgeting template. You can check them out to have more inspiration on how to go about this process.

5. Make room for savings

Now that you have a budget and reduce some of your common expenditure, it’s time to use the leftover money for your savings.

I do encourage you to open up a new bank account for your savings instead of just having everything in one account. You will tend to just use that savings, to be honest, speaking from experience here.

You can check out CIT Money Market Account – what I recommend to my readers. It’s FDIC insured, better APY, and no tiered interest rate.

While I do usually tell my readers to make the savings contribution every month on auto mode, if you’re really tight with money, you might want to do it manually first until you’re comfortable with the amount.

The reason being, if you suddenly had to use the extra money and you want to get back some of the money from the savings account, they do have a limit on the number of transactions per period cycle. So you might get charged for that.

But if you’re okay and comfortable, make it an auto-payment so it’s done and done every single month.

6. Find ways to increase your income

Now that you get your system right, it’s time to explore other ways where you can increase your income every month.

This could mean simply by asking your boss for a raise or switching jobs to get better pay – like I did. This is probably the easiest one for you to tackle first.

If you already get higher pay (congratulations!), you can also opt to do a side hustle. Here’s the post where I listed down all side hustles I’ve ever done – maybe you can get some inspiration.

Or you might want to check out these side hustles ideas that I’ve collected.

My current side hustle today is blogging. I create websites, write content, and earn from display ads and affiliate marketing. If you want to explore this side hustle, you can check out my post here on how I started as a newbie 3 years ago.

But if you’re creative and maybe you want to sell something on Etsy, why not sell printables? I’ve recently gone through Printables by Number course and it’s amazing. It’s very thorough, step by step, and has a guide on how to start selling.

Read my full review of Printables by Number here.

I took that course so that I’ll be able to create more printables for you guys but it could also be a very liable source of extra income.

You can do these side hustles for a few or a couple of hours a day before or after your day job. It might be slow at first but you’ll see how far you’ve gone after a few months 😊 That’s exactly how I started and now been doing it for 3 years already!

Ready To Save Money From Your Paycheck?

These easy and straight forward 6 steps should able you to save every month.

Honestly, it’s not rocket science. You just need to put in the work – like anything you want in the world. You have to put in the work.

If I could do it, I believe you can do it too 😊 Remember that this is not a journey for you to be able to do tomorrow. It might take some time – and it is OKAY.

As always, if you like the post and find it hopeful, please share it around – it’d mean the world to me!

If you find the post helpful, please share it around!

2 thoughts on “How To Save Money Living Paycheck To Paycheck: 6 Easy Steps To Do”

  1. Thanks for such a great article. It’s as if this article found me just when I needed it. Each of these tips seem totally doable. I’m going to download the budget template and start seeing what my expenses are and start coming up with my budget. I’m looking at new employment, actually a new company is looking at me, and hoping that pans out and gives me a boost.

    Thanks again for such great tips.

    • Hey Jamie, glad it helped you 🙂
      Getting a boost of income will surely help you get out of the paycheck-to-paycheck wheel a lot faster.
      All the best!


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