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Paycheck to Paycheck

Tips for Making Ends Meet

By Jenn Director Knudsen

With difficulty, Cari and her husband created an emergency fund out of their tight budget and breathe easier now, knowing they've got money to fall back on if need be. "That way, if a pipe breaks or the car needs to be repaired, we've built up an extra cushion," Cari says.

Shapiro, who teaches basic money management classes to women, tells her students to set a goal of saving one month's living expenses, eventually turning that into a six-month pot. "Only then can you start investing," says Shapiro, who spent 15 years as a single mother living paycheck to paycheck.

Call your financial institution to learn more about your options. A savings account, certificate of deposit (CD) or interest-bearing checking account are all relatively risk-free – and accessible – places to put your money and make it go further.

Get creative with your paycheck itself. Some companies allow you to split it between two banking institutions, says David Hammarstrom, a MetLife representative. That way, even $25 on each check can get automatically funneled into a savings account. "It seems that people can get used to a slightly smaller paycheck, whereas it's much more difficult to take money and set it aside," Hammarstrom says.

Living paycheck to paycheck is stressful, if not downright crummy, Cari and Kristy say. But they've both learned a lot from having to budget at every turn. "By having to be extremely selective about what I purchase, I've found that I really don't need nearly as many things as I thought," Cari says. "I'm almost embarrassed by the amount of money I [once] spent on clothes and makeup."

"I think a big thing is the ability to live within your means and ignore the part of you that feels stupid always driving the ugliest car or living in a rental with beat-up furniture," Kristy says. She says needing to count every penny actually can be liberating. "[There's] no more keeping up with the Joneses [and] no screaming at the kids for drawing on the Ethan Allen."

* Last name withheld to protect privacy.