How to avoid paycheck stress

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Saving on your insurance can free up more funds for your savings — boosting your investing power — or ensure that you can add to your monthly entertainment expenses.

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. It’s important to make room in your monthly budget for emergency fund contributions.

Ideally, your savings should cover three months of essential bills at a bare minimum — though six months is ideal. 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.

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 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.

In recent years, inflation has been a challenge for American workers and has monopolized more of their paychecks. But, while you can’t help that living costs have risen even as pay hasn’t kept up pace, you can avoid spending more by pledging to steer clear of lifestyle creep — otherwise known as lifestyle inflation.

It can also pay to be cautious when you get a pay bump. After all, that extra cash in your checking account could tempt you into an ever-escalating lifestyle.

Instead, you could put these new funds into a high-yield savings account. You won’t miss the extra money because you won’t be used to having it to spend.

While waiting for your next raise, you could also squirrel away your spare change to build your nest egg or an emergency fund.

Finally, 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 a boost to your emergency fund or your 401(k), investing in your future is better than the short-term pleasure of a bunch of one-off expenses.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.