Living paycheck-to-paycheck

Nearly 28.7% of Americans rely on their next paycheck to keep themselves afloat.

How long would you be able to manage your living expenses if you lost your job tomorrow? Would you be good a week? A month? A year?

Finder surveyed 2068 adults to learn how long the average American could survive without an income. It turns out that approximately 72.8 million employed Americans — 28.7% of the population — say they couldn’t get along financially for more than a week if their payday wasn’t on the horizon.

And an additional 44.8% can survive between two weeks and six months. That means an estimated 186.7 million employed Americans, or 73.5% of the population, can live off their savings for six months or less before going broke.

On the other end of the savings spectrum is a cluster of 10.8 million employed Americans, or 4.3% of the population, who say they don’t have to rely on a rainy-day fund, because they have some type of income protection

Making ends meet: Men vs women

Which gender among the 72.8 million Americans who’d blow through their savings within a week is better off?

Well, some 38.7 million women (30.2% of American women) say their savings would stretch less than a week, compared to 19.4 million men (15.4% of American men) who admit to the same.

The majority of employed Americans over the age of 18 say their mad money would last them six months at most. About 84.8 million men (67.5% of American men) and a whopping 102.3 million women (79.7% of American women) think they’d go belly up within six months of losing their livelihood.

Yet, the nest egg would sit around a bit longer before cracking for other Americans. About 21.6 million men (17.2% of American men) believe they’d survive for more than a year if their source of income ceased to exist tomorrow, compared with 13.2 million women (10.3% of American women) who believe the same.

What are the top emergency expenses Americans should save for?

Some living expenses are unavoidable. Main expenses you should be saving for according to investment management company Vanguard include:

  • Housing. This is your mortgage payment, rent or any other cost that goes toward keeping a roof over your head.
  • Food. Setting aside enough money to nourish yourself and your family is a budgeting-must for everyday living.
  • Health care. Covers visits to the doctor or dentist, any type of health insurance and medicine purchased at the store.
  • Utilities. Keeping the water, lights, heat and gas on means putting enough money aside each month to cover these bills.
  • Transportation. Your method of getting around could include a monthly car payment, insurance, gas, public transportation or rideshare costs.
  • Personal expenses. Rather than think about entertainment and dining out, focus on building the extra cushion for that broken hot water heater or flat tire.
  • Debt. Avoid sinking your credit with timely payments on credit card bills, personal or student loans, medical debt and other bills.

7 tips to break the paycheck-to-paycheck cycle

Pulling yourself out of paycheck-to-paycheck starts with baby steps toward your savings goals.

Create a budget and stick to it.

Look at your monthly income against all of your monthly expenses. Add to them expenses you pay once or twice a year to avoid a surprise when they creep up. After you know where your money is going, you can allot specific amounts to different categories and effectively track your spending.

Start an emergency fund.

The goal is getting to a point where you’ve saved enough money to cover expenses for a month, and then six months and then ultimately a safer nine months. Consider setting up automatic deposits from your checking into savings for a set-it-and-forget-it nest egg.

Put money where it’s difficult to access.

To reduce the temptation of tapping into your savings, consider tucking away your automatic deposits into an online bank account or somewhere other than your main bank. Look for an account without a debit card for insurance against easy indulging.

Pay off or consolidate your debts.

Use any leftover cash from your budget to chip away at your debts. Many people claim success with the snowball, avalanche and other methods of paying down debt. Compare 0% APR balance transfer credit cards or debt consolidation loans to save on interest and simplify your bills.

Take up a side hustle.

You may be able to turn extra time into extra money by:

  • Driving for Uber or Lyft
  • Putting your skills towards freelancing
  • Selling your stuff online
  • Doing odd jobs
  • Renting out your apartment on AirBnb
  • Participating in paid surveys

Invest in your future.

If the company you work for offers a 401(k) or investment alternative, sign up for the opportunity to passively save for retirement — especially if there’s a company match. Start small with 4% and increase your contribution with future salary increases.

Shop around for stronger deals.

Compare cheap car insurance rates to see if you’re paying too much in monthly premiums. See if you can keep your grocery budget under a set amount by sticking to buying what’s on sale. If you get creative, you may find you’re squirreling away enough extra cash to get ahead of the paycheck-to-paycheck cycle.

Teach your kids strong financial literacy.

Start early by teaching your children healthy financial habits to set them up for success, helping them avoid the paycheck-to-paycheck cycle altogether. There are plenty of debit cards for kids designed to teach them finances, and some are even free.

For media inquiries:

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Allan Givens
Public Relations Manager

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Nicole Gallina
Communications Coordinator

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