Living Paycheck to Paycheck? Suze Orman Says You Can Still Save

Suze Orman doesn’t mince her words when it comes to saving. The host of the Women & Money podcast told CNBC recently, "You have got to live a life below your means but within your needs." And she believes that's something everybody can do, no matter how little you have in your bank account.

Living below your means involves spending less than you earn, which then gives you funds you can put toward other financial goals. That includes shaking off credit card debt, slinging money into an emergency fund, and saving for old age. Orman believes people need to work toward these, regardless of what’s happening in the wider economy.

Sadly, for many Americans who live paycheck to paycheck (or have dipped into their savings to deal with high living costs), that’s easier said than done. The costs of everything from housing to childcare and groceries remain high, and wages haven't seen corresponding increases.

Orman believes you can break the cycle

If you regularly find yourself counting the days to your next paycheck and stretching your final dollars, Orman's words may sound impossible. She says the first step you can take is to squeeze every penny out of your budget, even if you feel like you never do anything fun. "I’m willing to bet every single one of you that there's something you're doing with your paycheck that you should not be doing," Orman says.

She gave the example of dining out, even if you only do it once in a while. Orman stresses that even investing a small amount of money regularly can make a difference. "Every time you go to spend money, you ask yourself the question, is this a want or is this a need? If it's a want, do not buy it," she said. For Orman, needs are things like food, gasoline, medicine, and housing payments -- not restaurant meals.

The other major factor in breaking the paycheck-to-paycheck cycle, says Orman, is our mindset. The personal finance guru advocates that we start to view saving as a positive thing. "If you love saving as much as you love spending, I'm telling you, you will not be living paycheck to paycheck," she said.

She wants everybody to believe they have the power to save. "Where there is a will, there is a way," she says. Indeed, Orman says we should strike the word "can't" from our vocabularies. Another powerful tool in the Orman savings kit is to automate your contributions. That way, you send money to a savings account or retirement fund before you have a chance to spend it on other things.

Is she right?

One of the great things about Orman's words is that she recognizes the role that emotions play in how we manage money. For example, she says that the fear of not having enough for your retirement can get in the way of saving. It's paradoxical, but Orman says she's found people spend more when they are scared. By making a budget, cutting unnecessary spending, and taking control of our finances, she argues anybody can save money.

The challenge is that no matter how positive your mindset or how much you rein in your spending, some people will still struggle. For example, Orman talks about skipping restaurant meals and ruthlessly pursuing needs over wants. But some households are already doing that and still can't pay their bills. It's true that some people still have space to cut nonessential spending, but for others, saving money is a luxury right now.

Orman says if this is the case, people should get a second or third job to bring in extra cash. Again, that may work for some people, and if you are able to increase your earnings in order to get closer to your financial goals, fantastic. But it's important to recognize that there are people who won't be able to do this. Perhaps they have childcare responsibilities, medical issues, or don't have any spare hours for more work. There are only so many hours in the day and only so many hours we can work before we burn out.

Bottom line

When you're living paycheck to paycheck, it can feel as if you'll never be able to build savings or put money aside for your old age. Take heart from Orman's insistence that you can do it. See if you can find ways to cut your spending or increase your income, and tell yourself this is an achievable goal.

However, if you're already struggling to keep your head above water, don't be too disheartened by Orman's straight talking. Instead, try to make a longer-term plan on how you're going to change your situation. That might mean learning new skills to get a better paid job, or even moving to reduce your housing costs. It may not happen overnight, but Orman is right to say you can change your situation if you believe it is possible.