I’m a Self-Made Millionaire: Do This to Stop Living Paycheck to Paycheck

More than a third of Americans (34%) currently live paycheck to paycheck, according to a recent GOBankingRates survey. And, according to the same survey, 18% of Americans have nothing saved, making it much harder to escape the paycheck-to-paycheck cycle. Fortunately, a self-made millionaire may have the solution you are looking for.

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“The quickest way out of the paycheck-to-paycheck trap is to create a cash flow cushion,” said Bernadette Joy, financial advisor and self-made millionaire. Here’s what that entails, why you need one, and how to build it.

Joy recommends creating a “cash flow cushion” by keeping at least one month’s expenses in your regular checking account.

“This way, you never have to anxiously wait for your next paycheck to cover rent or groceries,” he told GOBankingRates. “It gives you a break, avoids overdraft fees, and allows you to make financial decisions from a place of confidence rather than desperation.”

Some financial experts recommend covering three to six months of essential expenses in a separate emergency fund. However, Joy suggests that keeping this smaller cash cushion could be enough to free you from living month to month. Once you build this momentum, you can start focusing on other financial goals, like paying off debt or increasing your income.

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The first thing you need to do is calculate how much you need to save to serve as a cash flow cushion. In her book, “Crush Your Money Goals,” Joy explains that this mattress should contain enough to cover your rent or mortgage, utilities, food, transportation, and essential health expenses for a month. Once you know how much you need, take steps to save that amount.

“This might involve reallocating some of your savings or adjusting your budget to prioritize building your cash flow cushion,” Joy wrote in her book.

Joy also said that it is important to maintain this cushion once you have built it.

“Many checking accounts will allow you to set an alert when your balance reaches a certain threshold,” he wrote. “If a month’s expenses for you are $5,000, try to always have at least $5,000 in your checking account and pay attention if it is less.”

Caitlyn Moorhead contributed to this article.

Survey Methodology: GOBankingRates surveyed 1,006 Americans ages 18 and older nationwide between December 6 and 9, 2024, asking them 24 different questions: (1) What is your preferred banking method?; (2) How optimistic are you that you will add more than $2,000 to your savings account balance over the next year?; (3) How much do you anticipate your savings account balance will change over the next year?; (4) How would you characterize your current level of stress as it relates to your current savings?; (5) What is the minimum balance you maintain in your checking account?; (6) How much do you currently have in your savings account?; (7) How much of your salary do you deposit in your checking account?; (8) How much of your salary do you deposit in your savings account? (9) How satisfied are you with your current bank?; (10) What is the worst thing about your current banking situation?; (11) If you could change one thing about your current banking situation, what would it be? (12) Which of the following bank accounts do you currently use or have open? (Select all that apply); (13) What type of bank account do you trust most to keep your money safe?; (14) What type of bank account do you trust LESS to keep your money safe?; (15) Do you trust digital banks (neobanks, online-only banks) as much as traditional banks with physical branches?; (16) In the last year, how often have you issued a physical check?; (17) When was the last time you chose to visit your bank in person?; (18) Are you concerned about the increasing number of physical bank branches that have closed in recent years?; (19) Have you had an overdraft on your checking account in the last year?; (20) How much cash do you keep at home?; (21) Do you think it is necessary to change the current banking system?; (22) Do you think that the current banking system benefits the rich more than the middle or lower middle class?; (23) Do you believe that the current US banking system is unfair to Americans of lower economic status?; and (24) How have the results of the 2024 presidential election affected your financial prospects going into 2025 and beyond? GOBankingRates used PureSpectrum’s survey platform to conduct the survey.

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This article originally appeared on GOBankingRates.com: I’m a Self-Made Millionaire: Do This to Stop Living Paycheck to Paycheck