6 in 10 Americans Live Paycheck to Paycheck. Here's How to Build Your Emergency Fund From the Ground Up

Imagine you're in the midst of a typical month when your car decides to stop running. One $700 repair later, you're back on the road -- only now you're stuck with a large credit card balance you're not going to be able to begin to chip away at until your next paycheck arrives.

When you live paycheck to paycheck, you have no savings on hand for things like higher-than-expected bills or unplanned expenses. And that, frankly, can be a very stressful way to live.

Unfortunately, that's the reality for 61% of Americans, according to a recent CNBC survey. And if you're part of that statistic, it means you're vulnerable to debt the next time an unanticipated bill lands in your lap.

Not only can debt be costly in terms of interest, but too much of it has the potential to damage your credit score. And that could have an impact for years. It could force you to do things like delay homeownership, and it could even limit your ability to live where you want to live due to not qualifying for a rental.

If you're tired of living paycheck to paycheck, your best bet is to build yourself an emergency fund. And while that's not easy to do when you're starting with a balance of $0, here's how you can gradually accumulate some cash reserves.

1. Cut your spending to a reasonable level

Many people who live paycheck to paycheck aren't in that boat because they're driving $90,000 cars and living in homes that cost $7,000 a month. Rather, it's that many are challenged by stagnant wages.

As such, you may not be in a position to cut your spending significantly. If you have no savings, chances are, you're not earning all that much and therefore aren't spending an unreasonable amount.

But you may be able to cut a little bit of spending here and there, whether it's canceling one streaming service or walking more often instead of constantly putting gas in your car. These small changes might seem insignificant, but they can make a big difference over time.

If they result in an extra $30 a month in savings, after a year, you've got a $360 emergency fund. That's far better than $0.

2. Embrace the gig economy

When you work hard at a primary job, the idea of getting a second one can be downright unappealing. But the nice thing about the gig economy is that it's fairly flexible. And often, you don't have to commit to a side hustle in terms of schedule and hours. If you sign up to drive for a ride-share company, for example, you can work when you want and however many hours a week you can fit in.

Of course, some side gigs are less flexible. If you're picking up shifts at a local retailer, management is likely going to want a commitment. But think about what your schedule looks like and how much extra work you can handle. Even if it's not that much, any extra income you're able to generate could go a long way toward helping you build savings.

3. Put the process on autopilot

Many people have the best intentions when it comes to saving money but get tripped up along the way. If you want to build an emergency fund to stop living paycheck to paycheck, take a look at your bills and earnings and see how much money you should, in theory, be able to save every month. Then set up an automatic transfer so that sum lands in your savings account as soon as each paycheck arrives.

If you send money into savings as soon as it becomes yours, you won't get a chance to spend it. And let's face it -- we all get tempted to spend money when we know we shouldn't, and it's hard to say no. This system makes it so you really don't give yourself a choice.

Living paycheck to paycheck can easily ruin your outlook and wreak havoc on your mental health as well as your finances. And you deserve better. So if you're tired of having no financial cushion whatsoever, take steps to build your emergency fund, even if it's a slow process. Over time, your efforts are apt to pay off.