5 Ways to Save when you are Paycheck to Paycheck

We do a lot of talking on our site about saving money – and although some of us think it’s incredibly important, in many cases it can be seem impossible to save if you are surviving on a low income.

76 of Americans are living paycheck to paycheck (Source)…. which makes it really hard for those families to see past the next shopping week when you have to make the check stretch for rent, and necessities, first…

No matter what your income, it’s important to think about the future – even IF you are making minimum wage or surviving paycheck to paycheck, it’s important to save – even if it’s little by little..

#1 – Cut your Largest Expenses

Cooking meals at home and reducing or canceling your cable are both great places to start… if you have already cut down all of your small expenses, then focus on the larger.

If you rent, consider downsizing to a smaller home. OR … consider renting out a portion of your home, or even living with roommates.  If you have a car payment, consider selling your vehicle (if it will allow you to pay it off), and purchasing a reliable used car.

#2 – Have Debt? Pay the Smallest Debt First

To be able to save more you need to pay off your current debt – and although many people say that it’s wiser to pay the high interest first, it’s actually better to pay the smallest debt first. Instant gratification will compound and give you a feeling of accomplishment.. by seeing those debts pay off one by one, you will feel encouraged to continue. It will give you that motivation.

Why not the high interest?   Although it’s a mathematical advantage, personal finance is 80% behavior and 20% math – so if you were good at math, you wouldn’t be in the situation you were in to start with.  Those little victories, compounded faster, will give you that encouragement to keep going.

#3 – Keep your Budget Minimal

Take control of your money, and keep it as lean as you possibly can. Although we realize it’s easier said than done – it will require your discipline long term to make those sacrifices that will allow you that little bit of wiggle room to tuck money away.

Learn how to spend in moderation – read our last post on Some of the Reasons you aren’t Saving Money.  Many of those MIGHT just be the reason you can’t effectively free up money. 

#4 – Take Advantage of FREE Money Available

If you are a family with low income, you may qualify for the Earned Income Tax Credit (EITC). Use that to jump start a savings account, instead of going out and making a large purchase.

Look for other ways you can earn FREE money at work – whether it be through an employer match of a 401K – as most companies will match a percent of your contribution – that’s almost like free money towards your retirement. If you end up leaving that job, you can still keep your 401K and see an investment profession to roll it into a different vehicle later on.

#5 –  Take a Second Job

Deliver pizza, become an Uber driver, work at the Elementary School if you can as a Classroom Aide (or, Substitute) if they are looking and if you qualify. Seek out your local Grocery Store for night positions as a stocking clerk. Waitress at a restaurant a few days a week.

Aside from your Full Time income, you can provide another source of income that might just make a really huge difference. Focus on what you like to do and find something that fits, many opportunities are available for people to work out of their home too (U-Haul Receptionist, Data Entry, Virtual Assistant, etc.)

Saving money when you are paycheck to paycheck can be done, but like anything else, it will be determined by your behavior and habits more than anything else. You will need to take a good look at where your priorities are, and then develop your spending habits to revolve around those priorities.

One of the biggest obstacles is your attitude.  You are only a victim if you choose to be one by refusing to acknowledge your own contribution to your problems and refusing to save anything for the future.  

You can’t out-earn a spending problem.