Paycheck-to-paycheck living can feel like running on a hamster wheel: working nonstop only to have a bank balance that never grows after paying your bills.
This is a reality for many Americans — 24% don’t have emergency savings. When unexpected expenses like car repairs hit, many turn to external financing to get by. This affects their financial health and causes a lot of stress because it feels like they’re stuck in a never-ending cycle of working and starting over.
But here’s the thing: While building savings can feel like a Herculean task, especially with rising costs and unpredictable expenses, it’s possible. In this guide, we show you how to grow your financial cushion.
When you’re living paycheck to paycheck, you have little to no money left after covering expenses like your rent, utilities, and groceries. No savings. No financial cushion in case an unexpected expense comes along.
While this may seem like a problem for low-income earners, it also affects those on the other end. Plenty of high-income earners (48% of U.S. consumers earning over $100,000 annually) fall into the paycheck-to-paycheck cycle because inflation and debt affect everyone.
Whether you’re a low-income or high-income earner, paycheck-to-paycheck living has the same impacts:
Living paycheck to paycheck doesn’t just affect your wallet; it also takes a toll on your peace of mind and can even impact your mental health. Financial challenges can lead to anxiety, depression, and insomnia, making it vital to find ways to escape the cycle.
Budgeting may seem like a restriction, but it’s actually a way to build financial freedom. When you have a well-thought-out budget, you can see where your money goes, which helps you to create a savings game plan.
To create a simple budget:
If your total estimated expenses leave you with no money, consider cutting back on wants like entertainment. Finding as little as $20 per payday to add to your savings account is a great start that will add up over time — if you stay disciplined and stick to your budget.
One of the best ways to protect your personal finances is to decide what to pay first and what to reduce or cut. Here’s how to do that:
Large purchases aren’t the only thing that drains your budget. Small expenses like daily coffee runs, multiple subscriptions, and unplanned shopping trips add up, and may be the reason you’re constantly wondering where your money goes. Here’s a look at some ways to adjust your spending:
You can’t cut what you don’t see. So, start by tracking every expense, whether it's your water bill, a ride-share trip, or your morning coffee.
To make this easy, use budget apps like EveryDollar, Honeydue (great for couples), and PocketGuard. Tracking shows you where your money actually goes, making it easier to identify the non-essential expenses.
The average American spends over $1,000 annually on subscriptions, with an estimated $200 going toward services they don’t use. That’s $200 that could be in savings accounts each year.
Chances are, you have a few subscriptions you don’t use. While the few bucks they cost may not seem like much, they can add up over time, eating up significant savings.
To identify them, review your statements and look for recurring charges. Then, cancel what you don’t need. For example, if you have multiple streaming services, identify the one you use the most and cancel the rest — at least until you get your finances in order.
Shopping can put a large dent in your budget if you’re not careful. So, tweak your spending habits to leave a little extra money in your account.
You can reduce shopping expenses by:
You can also save money by buying used products and negotiating with sellers. But be careful not to buy damaged items, as they’ll only increase your expenses over time.
While these shopping changes may seem small at first, they can add up to significant savings. Don’t underestimate the $5 or $10 difference — it adds up over time.
Saving can feel impossible when you pressure yourself into setting aside significant chunks of money. Instead of aiming to save 10–15% of your paycheck, start small and build up your consistency. For example, your first goal could be to save $50 every month. Setting a manageable goal increases your chances of sticking to your plan without drastically affecting your quality of life.
You can also grow your savings by:
Here’s a look at how your savings account would look if you save as little as $50/month for six months and then increase the amount:
Build an emergency fund to help cover unexpected expenses, like medical bills and car repairs. This way, you won’t have to dip into your savings whenever they arise.
As with your savings account:
For many people, debt is one of the biggest hindrances to sustainable saving. But it doesn’t have to be. You can grow your savings, even as you pay off debt. Here’s how:
High-interest financing, like payday loans and credit cards, can take a significant portion of your paycheck, making it seem impossible to save. So, start by paying them off.
To manage this without falling behind, arrange your debts from the highest to the lowest and make minimum payments on each. Then, put extra money into your highest-interest debt. When that’s done, do the same for the second-highest-interest debt and so on until you pay off each one.
If you need external financing, look for loan options with low interest rates. While this may take some time (since you’ll want to compare multiple providers) it’ll make a big difference in your wallet.
You can also save on interest by:
A good rule of thumb is to follow the 80/20 split. Use 80% of your extra cash (earnings minus weekly or monthly expenses) to pay debt and dedicate 20% to savings.
If you don’t have an emergency fund, split the savings portion to create one. An emergency fund can reduce your need for external financing when unexpected expenses arise.
If your spending is consistent, extra income will mean more money to your savings account. You can boost your income by:
The path to building savings isn’t always straight. It’s normal to experience setbacks, like not reaching your savings or emergency fund goal. If this happens, don’t give up. Setbacks don’t erase progress; they show you what works and what doesn’t, so you can improve your savings strategies.
If you find yourself in situations where expenses exceed earnings and savings, use cash advance apps like Klover instead of taking out high-interest loans. Cash advance apps provide early access to earned wages, helping you cover expenses before your next payday.
Klover offers cash advances with zero credit checks, interest, or late fees, so you don’t have to worry about adding to your debt. With us, you can handle expenses (and emergencies) and stay on track with savings by avoiding interest charges and penalties.
Saving money when living paycheck to paycheck may seem impossible, but it isn’t. The secret is to start now. Start with small steps, like canceling unnecessary subscriptions and looking for deals when shopping. Also, use budgeting and cash advance apps to track your spending and bridge financial gaps without increasing your debt.
Klover is a leading cash advance app that offers interest-free, penalty-free advances of up to $400 to provide breathing room when money’s tight. In addition to our advances, we offer built-in budgeting tools to help you track your spending and stay on top of your financial goals.
Download the Klover app today to access cash advances and financial tools that help with your savings journey.
