Living Paycheck to Paycheck in the EU and Estonia
22 April 2024

Many in Europe face the tight grip of living paycheck to paycheck, but do they even realise it? And what does living paycheck to paycheck even mean?

What does it mean to live paycheck to paycheck?

The expression ‘paycheck to paycheck’essentially describes an individual who would struggle to meet their financial obligations if unemployed. Often referred to as the working poor, these individuals manage day-to-day expenses but are unable to save, leaving them vulnerable if they lose their primary source of income[1]. In this state, making ends meet is possible, but financial advancement is not.

The term living ‘paycheck to paycheck’ is commonly used in the US, but in Europe, we typically refer to this situation as ‘financial vulnerability’, which is a similar concept[2].

Statistics in the EU and Estonia

In 2020, 46.2% of EU citizens did not have enough savings to maintain their lifestyle for three months or more without income, while 53.8% did. In Estonia, these figures were slightly more stark, with 51.7% unable to sustain themselves compared to 48.3% who could[3].

The 2020 figures were significantly influenced by the unique economic conditions during the COVID-19 pandemic, which saw a surge in the gross household savings rate across the EU. Typically, the average savings rate used to be around 11% of gross disposable income. However, in 2020, it spiked to an unprecedented 18.5% as individuals and families reduced their spending due to lockdowns and other restrictions. By 2021, the rate had adjusted slightly to 16.4%, and the latest statistics from 2022 show a return towards normalcy at 12.7%[4].

As savings rates are projected to stabilise around the historical average of 11% by 2024, it is likely that fewer EU citizens will have sufficient savings to support themselves for three months without income.

How do we stop living paycheck to paycheck?

There are two main approaches to tackling financial vulnerability: through (1) State Assistance or (2) Individual action. State help often involves unemployment protection schemes, which provide a basic safety net but are not a comprehensive solution for maintaining one’s standard of living during tough times.

1. State Assistance: Falling Short

Unemployment benefits aim to keep people above the poverty line during personal economic downturns, but they’re usually not sufficient to preserve the standard of living. Additionally, they do not address the underlying issue of financial literacy.

The rules for these benefits vary significantly across the EU; for instance, you might be eligible for 24 months of benefits in one country but only 12 months in another[5]. This inconsistency and the fact that they do not equip individuals with the skills needed to manage their finances long-term, shows why we cannot rely solely on such schemes.

In fact, relying solely on unemployment benefits when things go south not only risks reducing your standard of living temporarily, but also perpetuates a cycle of dependency that obstructs long-term financial improvement.

2. Individual Action: The Path Forward

Addressing financial vulnerability on a personal level typically involves spending less than we earn. This can be achieved by either reducing spending to increase savings, or boosting income—both routes aim for the same outcome. To successfully manage your finances, it’d be wise to create a budget, reduce debt, and research any potential tax benefits. However, taking these steps is easier said than done… And where do you even begin?

There is no universal solution, but at FinKratt we’ve developed a financial roadmap to help guide you through these challenges. Our mission is to empower you to navigate financial decisions with ease and confidence.

Currently, FinKratt is in its proof-of-concept phase, tailored specifically to Estonia’s financial reality, so while the principles behind our tool can be applied globally, our immediate goal is to cater effectively to Estonian users.

In the future, we aim to expand FinKratt’s reach, making it the preferred resource for individuals aiming to improve their financial health globally.

We invite you to test out FinKratt for free and to share your feedback! All submissions are anonymous.


  1. Kagan, J., ‘Living Paycheck to Paycheck: Definition, Statistics, How to Stop‘ (updated 23 May, 2022) <> Accessed 21 April, 2024.
  2. Midões C., and Seré M., ‘Living with reduced income: An analysis of household financial vulnerability under COVID-19‘ (2021) Centre for Economic Policy Research, Issue 63, pp. 73-92.
  3. Eurostat, ‘Financial vulnerability in households‘ (updated 30 October, 2023) <>
  4. Europa Website, ‘Unemployment abroad‘ (updated 11 December, 2023) <> Accessed 22 April, 2024.
  5. Yanatma, S., ‘How much disposable income do households across Europe save?‘ (30 November, 2023) <> Accessed 21 April, 2024.