3 tips can help you save if you're living paycheck to paycheck, personal finance expert Suze Orman says (2024)

When you're living paycheck to paycheck, it can be tough to find money to save.

That was the situation one audience member, Natalie, wrote in about ahead of CNBC's Women & Wealth event on Tuesday. While grappling with high childcare and housing costs, Natalie is barely breaking even, she wrote, which makes finding money to set aside for big goals like retirement difficult.

A recent CNBC Your Money Financial Confidence Survey, conducted in partnership with Momentive, shows that she is not alone. More than half, or 58%, of all Americans are living paycheck to paycheck, according to the March results.

If you find setting money aside difficult, it's a sign that it's time to change your lifestyle, personal finance expert Suze Orman said.

"You have to strike the word 'can't' out of your vocabulary," Orman said in response to the audience query.

Rather, people should draw up a financial to-do list right now that includes getting out of credit card debt, having an eight- to 12-month emergency fund and funding their retirement accounts, Orman said.

That's as many experts, including Orman, say a recession could be coming.

But whether there is a recession or not, you need to be prepared that an unexpected event — like an illness, accident or layoff — could set you back, Orman said.

"The most important thing, really, for everybody to understand about their money ... is that you have got to live a life below your means, but within your needs," Orman said.

Several tips can help you get started.

People who think they are living paycheck to paycheck likely have something they are doing with money that they should not be doing, Orman said.

For example, if you go out to eat rather than eating in, that's $10 you could be putting into a Roth individual retirement account — an account for post-tax contributions towards retirement.

"You have to make yourself a No. 1 priority," Orman said.

That means you do what you have to do in order to meet your financial goals, she said, even if it means taking on more than one job or cutting back on discretionary expenses.

You should be always be funding your retirement accounts, Orman said.

To get into the habit of setting money aside, it's best to automate the process, Orman said.

So whether you choose to do $50 a month or $100 a month, by setting aside money before you see it in your paycheck, "you will find that you do not miss it," Orman said.

Orman suggests opening a Roth IRA, which can hold cash as well as investments.

The money originally deposited in a Roth IRA can be withdrawn without taxes or penalties, regardless of your age or how long the money is there. (Importantly, penalties may apply for any earnings withdrawn before the account is 5 years old and before you are age 59½).

To make progress financially, you need to get clear about your wants and needs, according to Orman.

"Every time you go to spend money, you ask yourself the question, 'Is this a want or is this a need?'" she said.

Needs are things you need to buy like medicine, groceries or gas. Everything else is a want.

"If it's a want, do not buy it," Orman said.

By developing new habits, you will find you start to get more pleasure from saving rather than spending, Orman said.

That will help eliminate financial fear, which tends to prompt people to spend more, she said.

"Once you start to automate savings and you love savings as much as you love spending ... you will not be living paycheck to paycheck," Orman said.