A recent study of American workers found that nearly half of respondents reported having less than $1,000 in savings. Seventy-five percent said they consider themselves to be living paycheck to paycheck.
Putting money into a savings account is critical to ending the paycheck-to-paycheck cycle, but finding extra cash can be difficult when funds are tight. However, there are small ways to save money even on a tight budget.
If it feels harder to cover bills now, it is not imagination. Several factors contribute to this financial squeeze.
Inflation rates remain elevated. The current inflation rate is 2.7%, lower than last year but still above the government's 2% target. High inflation makes everyday essentials like groceries and fuel more expensive, reducing the buying power of money.
Wages are not keeping pace with increased prices. A recent study found nearly half of employers reduced pay rates for some roles over the past year. With stagnated wages and higher inflation, income does not stretch as far as it used to.
The unemployment rate has been steadily increasing. Major companies including Amazon, Google, and Tesla have announced significant layoffs. In fields with common layoffs, finding a new job can take longer, depleting savings.
Consumer debt is rising. Consumers are carrying more student loan debt, auto loan balances, and credit card debt. High interest rates and monthly payments can drain budgets, leaving less for expenses.
Even on a tight budget, strategies exist to set aside extra money and build savings.
Tracking spending diligently can help trim expenses. Budgeting tools like Quicken Simplifi or PocketGuard can assist, or it can be done manually with a paper budget or spreadsheet.
Using roundup apps such as Acorns, Chime, or Qapital can build savings with spare change. These apps round up purchase amounts to the next dollar and deposit the difference into a savings account.
Checking local "buy-nothing" groups before purchasing new items like furniture or kitchen supplies can provide items for free. These groups connect people in communities to give away unneeded items.
Employers may offer special programs like matching 401(k) contributions or student loan repayment assistance, providing extra cash for retirement or debt payoff.
Negotiating bills with providers for services like cell phone or internet can lower costs. Apps like Rocket Money, Trim, or PocketGuard can negotiate on behalf of users, taking a percentage of savings achieved.
Selling unused items such as clothing, toys, or electronics can generate cash. Platforms like Poshmark and ThredUp are for clothing, eBay or Mercari for collectibles, and Gazelle or Decluttr for electronics.
Finding additional income sources can help when cutting expenses is not enough. Renting out extra space on sites like StoreAtMyHouse, listing parking spots on CurbFlip, or taking one-time gigs on TaskRabbit can earn extra cash. Earning even $25 to $50 per month from these platforms can build a safety net over time.