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Living from paycheck to paycheck can be stressful, especially if you don’t have a spending plan or budget in place. The best way to save money from your paycheck is to make a plan. It doesn’t stop there though, we’ll cover some other good ways to make things less stressful.
The main essence of earning is to spend and save. Often, we find that people hardly save due to the many financial constraints they go through. Extra debt payment, one trip too many to Starbucks and that killer sale at the craft store can all wreak havoc on our budgets.
However, there are various ways in which one can save money from paycheck. Remember it’s important to save money which will help you later in life, or even on an emergency. Saving money might be hard at first, especially when you feel like you don’t have any extra money to start with, but the added security and peace of mind make the struggle worth it.
Below are some ways in which one can save money from the paycheck and still live a comfortable life.
1. Establish a Financial Plan or Budget.
I remember living from paycheck to paycheck. It’s hard. Creating a budget really does help. The thing with budgets is, you shouldn’t feel pressured to do it all at once.
There are two things that have to happen in order to save.
Stop Spending More Than You Earn
It is impossible to save money and acquire debt at the same time. Those items are counter productive. Before you can start saving money you need to stop accumulating debt.
Creating a budget can help eliminate overspending. Once that is addressed, savings can start, even if in small increments.
Establish a Saving Habit
Breaking the paycheck to paycheck cycle is tough. I’ve been there. In fact, I had to first break the payday loan cycle and then move on to break the paycheck to paycheck cycle. It is worth it and you can do it!
One thing I highly encourage you to do is start a monthly savings habit. It can be $1 per month or $1 per paycheck. What matters is that it is a conscious decision to save.
I would go a step further and say that you should make a habit of manually transferring the money from your checking to your savings. That manual transfer provides you with a connection, a reminder of the goals you are trying to achieve.
2. Getting an extra source of income.
Deciding to save when you barely make enough to survive can be challenging. What if your paycheck doesn’t cover your monthly bills? The option here is to get an extra source of income.
I know, that is easier to say than it is to do often times. Sometimes, it is just a matter of looking at non-traditional income sources. Today’s side hustles may be in the form of online jobs, babysitting, assisting students in completing their homework after school.
Can you offer after school babysitting to a few kids in your child’s class?
Stay alert in your day to day dealings with others. Do you ever hear them complain or mention a problem? Most people are willing to pay for a solution to their problem whatever it is. Pay attention and see how you can hustle.
So long as your side hustles result in some kind of a profit, they are worth working on and will help you towards your end goal of being able to save money.
3. Cut Your Spending
This step goes hand in hand with establishing your budget. I highly recommend that your initial budgets are not too strict. If you start off too hard on yourself you are more likely to fail. Instead, I recommend routinely adjusting and cutting your spending where you can.
Each month, try targeting a different area of your budget. Can you live off of $50 less for your grocery budget? If you implement a “sweaters first” rule before turning on the heat, how does that affect your gas or heat bill?
I remember when I realized I was spending an average of $8 a day buying lunch. That adds up to $40 a week or over $160 a month! Think about how something as simple as packing a lunch can help with reducing expenses.
Make it a habit to eat something before you leave the house on the weekends for example. Go an extra step and pack a granola bar. You may be surprised how much you can reduce your weekend “dining” expense by making just a few modifications to your regular routine.
4. Work on Your Debt Snowball
As we briefly touched on above, you can’t save money if you overspend each month. Debt has another consequence, interest fees. Interest fees are like a monthly bill for which you get absolutely no return.
The traditional Dave Ramsey approach to debt snowball recommends saving a $1,000 emergency fund before starting debt repayment. This “baby emergency fund” is meant to cover surprise expenses.
Your habit of saving $1 per month should lead to saving $1 per paycheck. Your challenge is to gradually increase that number until you have your emergency fund. Then, you are ready to start paying off debt.
We’ve covered a lot of great ideas above but the reality is, sometimes you truly have to think about downsizing. When you just can’t get ahead and your income doesn’t cover your bills, downsizing may be the option you need. Some ways you can downsize to cut expenses include:
- Renting a smaller house or apartment
- Canceling unnecessary subscriptions and memberships
- Turning in your brand new car for a used model.
- Shop second hand
Each person’s situation is different. The best way to save money from your paycheck will vary from person to person. What is important is that you are looking to make a positive change. However you decide to tackle the problem, planning to succeed will help ensure you reach your goals.
If you need more help tracking your expenses and setting up a budget, check out these other helpful articles:
- Tracking Personal Expenses
- Getting Started with Your First Budget
- 5 Easy Ways to Save Money on a Tight Budget