According to a recent Lending Club report, 64% of Americans will live paycheck-to-paycheck in December 2022, up from 61% a year earlier. Plus, one-third of US consumers reported they weren’t saving any money.
But what does it mean to live paycheck-to-paycheck, and how does one break the cycle?
In this article, I’ll answer that question, but I’ll also show you how to save $1000 while living paycheck-to-paycheck, so you can start living within your means.
I’ve been in your place and I know there is a way.
What does paycheck-to-paycheck mean?
Paycheck-to-paycheck occurs when a person’s entire income must be used to cover expenses, leaving no room for savings or discretionary spending.
Paycheck-to-paycheck is an expression that describes a situation where a person’s entire income must be used to cover expenses, leaving no room for savings or discretionary spending. It’s a cycle that will keep repeating itself until you can either increase your income, reduce your expenses, or do both. In this situation someone may just be a layoff or a missed paycheck from not being able to meet the necessities of life like groceries or rent.
If you’ve found yourself in a similar situation, or are in one now, you know how difficult and frustrating it can be. If you’re bored of living paycheck to paycheck, here are eight steps to save your first $1,000 and be on your way to breaking the cycle.
How to save your first $1,000
If you are running short of money all the time, you need a lifeline. For most people, breaking the paycheck-to-paycheck cycle involves A) making more money, B) spending less money, or C) a little bit of both.
With a few simple strategies, you can even save your first $1,000. In addition to creating a savings cushion for a rainy day, this is money you can use to cover surprise bills or bail you out in an emergency.
It all starts with you and the steps you take to change your life. Here are eight ways to start saving $1,000 while you save Anything Seems impossible.
1. Open a separate bank account for savings.
Saving money is hard enough, especially when you don’t have a dedicated savings account. The good news is that you can open a savings account and get paid to do so!
Chase Bank offers account promotions that will get you on your way to saving your first $1,000 with little effort. For example, with the Chase Premier Plus checking account, you’ll earn $300 as a new customer just for opening an account and setting up direct deposit.
Some fees apply to Chase accounts, but there are plenty of ways to bypass them.
2. Earn money in your spare time.
If you have some free time during the day or evening, you can earn small amounts as a way to get ahead. Many websites will pay you to take surveys or complete simple tasks using your home computer.
Once you sign up, you can usually earn $10 – $30 just by answering questions or rating products or services! Some companies will even pay you to watch videos or print coupons at home!
One of my personal favorites is Inbox Dollars. This website will pay you to watch videos, answer questions and even surf the web.
Here are some other paid survey websites that you can try:
You will not get rich from paid survey sites but remember this is only the first step towards making extra money. The advantage of these sites is that you can start now and start earning money within minutes. To maximize your earnings, sign up for multiple sites at once.
For further reading, here is my review of the 11 Best Online Survey Sites.
3. Stop paying crazy-high interest rates.
If you’re living paycheck-to-paycheck and trying to get yourself out of credit card debt, you can kill two birds with one stone by refinancing your high-interest debt into a new card with a lower interest rate. Can
This way, you will save on interest and lower your monthly payment. You’ll also get out of debt faster by paying less interest every month.
One of my favorite balance transfer credit cards is Discover. With this card, you’ll get 0% APR for 18 months and 1-5 percent cashback on everything you buy. Balance transfer fees apply, but the card will never charge an annual fee.
If you’re drowning under high-interest credit card debt, consider a balance transfer card with zero percent interest. You can read about other balance transfer cards here.
4. Start a side hustle.
One way to change your lifestyle is to find ways to earn more money. If you can’t get overtime or can’t stand the extra shifts at work, then picking up a side hustle may be your best bet.
The best side hustle ideas provide a decent income without too much hassle or stress. Hopefully, you can find a job that’s also flexible enough to allow you to juggle your family and work commitments.
One of the most flexible side hustles for a company like Uber or Lyft. With a decent car and smartphone, you can earn up to $20 an hour by driving people downtown or to the airport. Driving for a rideshare company is easy and stress-free, and doesn’t require a huge financial commitment either.
Lyft is offering a guaranteed $1,000 to become a driver.
part of a program called Earning Guaranteed. According to the Lyft website, the promotion says that drivers will earn a guaranteed amount of money within a certain time frame. If the driver doesn’t make the guaranteed amount within the time limit, Lyft will cover the difference!
Don’t have a car? No problem! HyreCar is the pre-qualified car rental marketplace to drive with Uber and Lyft!
5. Refinance your pesky student loans.
The average Class of 2022 graduate left school with more than $37,000 in student debt and correspondingly larger monthly payments. Those monthly payments can eat up your paycheck and make it very difficult to get ahead.
Since you can’t discharge student loans in bankruptcy, they don’t disappear until you pay them off. The good news is that it may be possible to refinance your loan into a new loan with a lower interest rate and monthly payment.
While you may lose some protection if you refinance a federal loan with a private lender, you can save a lot of money with a simple refinance.
6. Lower your mortgage payment.
While it’s easy to assume that your mortgage payment is set in stone, it couldn’t be further from the truth. While interest rates are rising, depending on your situation, you may still be able to refinance your home loan and save cash each month.
Imagine a $150,000 mortgage at 6 percent over thirty years. If you calculate only principal and interest, your monthly mortgage payment is likely to be around $899.
Now, let’s say you refinance your mortgage into a new thirty-year loan at 4 percent APR. Overnight, your principal and interest payments will drop to $716. That’s over $180 in savings every month!
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7. Download app for cash.
Some apps will pay you just for downloading them – or for surfing the web as you normally would. This strategy may not result in life-changing sums of money, but your earnings can grow over time.
Here are some apps that I love:
Rakuten: Formerly known as Ebates, Rakuten lets you earn cash back when you shop online. Not only can you earn 10 percent or more for purchases made at online stores like Macy’s and Kohl’s, but you can also earn free money for shopping at Walmart.com and Amazon.com.
Acorns: Acorns helps you save money by rounding up every purchase you make. Whether you’re paying bills or making purchases, you can accumulate small amounts over time. Your earnings can accumulate in a big way in the long run. You can sign up with Acorns here using my special link.
iBotta: iBotta is a discount app that will give you cashback on your grocery purchases. You earn free cash for signing up and downloading the app ($5), and you earn money for the things you do every day. It’s easy, and it’s free!
8. Negotiate your auto insurance rates, and save big!
Most people assume that their auto insurance is a fixed payment, but this could not be further from the truth. Once you’ve been with a company for a while — even without a claim — they raise their rates. If you fail to make the purchase every year or every few years, you may end up paying more for insurance than you need to.
As a former financial advisor, I would always advise my clients to shop around for auto and even home owner’s insurance at least once every year. Worst case, you may find that the coverage you already have is a great deal. But, most of the time, you’ll find that you can save money by switching providers without sacrificing coverage.
See our list of the best auto insurance companies, or select your state below for today’s best rates.
Allstate and Liberty Mutual today for competitive rates that can help you lower your monthly payments. Getting a quote is easy – and it’s free.
Start saving now…and don’t let anyone get in your way
While saving $1,000 is tough when you’re living paycheck-to-paycheck, any of the strategies on this list can help you get there.
Imagine if you could find a way to save a few hundred dollars every month and increase your income at the same time. Over time, small changes you make can add up to a big difference!
Final Thoughts on Saving Money While Living Paycheck to Paycheck
Tired of living paycheck-to-paycheck? Remember that there is no “right” or “wrong” way to fix your financial situation, which is why anything on this list may work. My best advice is to pick a few options from this list, stick with them, and don’t let anyone hinder your progress. The sooner you start working towards financial freedom, the better it is for you.
How can I save money while living paycheck to paycheck?
One of the best ways to improve your financial situation while living paycheck to paycheck is to start tracking and budgeting your spending. By tracking your spending and allocating your income to specific categories like rent, utilities, food and entertainment, you can identify places to cut and start setting aside some money each month for savings.
Yes! There are many great resources available to those looking for financial aid. Many banks now offer free budgeting tools or financial advice from qualified professionals to help you manage your spending and savings. In addition, there are a number of websites and apps dedicated to helping individuals stay on top of their finances, including Mint, Quicken and YNAB (You Need a Budget).
Some ways to increase your income include getting a part-time job, starting a freelance business, asking for a raise at work (or looking for a higher-paying job), or renting out a room in your home.
Living within your means describes a situation where your weekly or monthly expenses are consistently less than your income. When you live within your means, you have the ability to save money regularly and avoid living paycheck-to-paycheck.
research articles cited
1. PYMTS-Lending Club. (nd) New Reality Check: The Paycheck-to-Paycheck Report. Retrieved from https://www.pymnts.com/study/reality-check-paycheck-to-paycheck-inflation-income-consumer-finance-spending/
2. Sisson PR Newswire. (2022, December 15) One-third of consumers report they are currently not saving any money. Retrieved from https://www.prnewswire.com/news-releases/one-third-of-consumers-report-they-are-not-currently-saving-any-money-301703795.html
3. Nitro. (nd) Average Student Loan Debt: 2022 Statistics in the United States. Retrieved from https://www.nitrocollege.com/research/average-student-loan-debt