It’s not so uncommon for Americans to live paycheck to paycheck — meaning, to not have savings to fall back on between pay periods. But a new survey conducted by Talker Research on behalf of EarnIn found that the average American has already mentally spent more than half of their paycheck before it lands in their bank account.
The survey polled 2,000 employed Americans who make less than $75,000 per year and found that the typical American spends about 43% of their paycheck within the first three days after receiving it, in addition to the roughly 51% that’s pre-spent mentally.
Overdue bills are a big driver of this trend — this resonated with 38% of respondents. But large bills, like rent or mortgage payments, necessities like food and medication, and smaller utility bills are likely to be among the first expenses paid after receiving a paycheck.
Of course, that approach makes sense, since essential bills should be covered first. The problem, though, is that only 20% of Americans don’t run out of money or otherwise have to live on a tight budget in the days leading up to their next check. Worse yet, 56% of respondents said that less than 10% of their pay goes into savings.
If you’re not saving as much as you should or managing your paychecks as well as you feel you could be, it may be time for some changes. Here are a few to consider.
Set a realistic budget
A recent survey found that 74% of Americans have a monthly budget. That’s good news. But, of those with a monthly budget, 84% tend to exceed it. That’s not so good.
This is why it’s not enough to just have a budget. Rather, you need a realistic budget. If your budget leaves you relying on credit or with zero room to spend money on leisure and activities, it’s probably not working and you need to assess if you’re living within your means.
To guide you, consider the 50/30/20 budget rule, which recommends that no more than 50% of your pay goes to needs (like housing, utilities, taxes), 30% goes to wants, and 20% goes to your savings. Another rule is the 30% rule and that suggests that no more than 30% of your gross income should go to housing expenses such as rent or mortgage payments, utilities, taxes, and insurance (though some experts suggest that 40% is more realistic these days).
To start, start tracking each cent. There are helpful apps to help you do that.
If you’re diligent about tracking your spending, you may be able to spot areas where you consistently overspend. This indicates your budget isn’t realistic. That’s why instead of cutting out all non-essential spending in your plan, you should prioritize what you spend on based on how much wiggle room you realistically have.
If you don’t have $600 a month to blow on restaurant meals, concerts, and social events, but rather, are limited to $200, decide which few things are most important to you based on your values. Next month, you can prioritize something else. Or, if needed, pick up a side hustle to boost your income so there’s more room to spend more.
Maintain an emergency fund at all times
The Federal Reserve reports that 37% of Americans do not have the savings to cover a surprise $400 expense. Similarly, in early 2025, a survey by U.S. News & World Report found that 42% of Americans don’t have an emergency fund at all, and that 40% couldn’t cover a $1,000 unexpected expense.
Without emergency savings, you risk falling behind on essential bills and having to resort to debt (possibly high interest debt) when unplanned expenses arise. So it’s important to make room in your monthly budget for emergency fund contributions.
Ideally, you should aim for enough savings to cover three months of essential bills at a bare minimum (though, if you can, try to stretch this to six months). That way, if you find yourself unemployed, you’ll have funds to tap to cover your expenses instead of having to reach for a credit card.
Not only should you make room in your budget for savings, but you should also aim to pay yourself first. Given that so many Americans mentally spend their paychecks before they arrive, to stay on track, you may want to establish a monthly savings goal and then set up an automatic transfer from your checking account to your savings account. That way, the amount you want to save will leave your checking account before you get a chance to touch it. You may even want to consider a micro-investing app, such as Acorns.
Steer clear of lifestyle creep
In recent years, inflation has been a challenge for American workers and has monopolized more of their paychecks. But while you can’t help the fact that living costs have been rising even as pay hasn’t kept up pace, you can avoid spending more by pledging to steer clear of lifestyle creep (or lifestyle inflation as it’s sometimes called).
Many people increase their spending as their income rises. And that’s okay to some degree. But if you do so at a pace where there’s no money left over for savings, you’re going to end up in the same position you’re in now, where you’re dependent on each paycheck that arrives to cover your essential expenses.
Rather than take on new expenses every time you get a raise, evaluate your savings and see if you can increase your contributions, whether it’s to your emergency fund or your 401(k). And if you’re getting your first raise in a long time and want to treat yourself, rather than spend the extra money on expenses you have to commit to on a recurring basis, spend it on one-off expenses here and there.
For example, with a $3,000 raise, you may be inclined to rent an apartment that costs $250 more per month. But once you sign that lease, you’re locked into it so that if other bills get more expensive, you’ll again have no wiggle room in your budget.
A better bet, if you really want to treat yourself after getting a raise, would be to buy a $250 pair of tickets to a concert or something similar as a one-time purchase. But from there, don’t commit to other bills right away.
In fact, if you send more of your money into savings automatically as your paycheck increases, you won’t miss the extra money, because you won’t be used to having it to spend. So that could be the easiest way to meet major goals you have and get to a place where you’re more financially secure.
