A new report has found that 63% of Americans are now living paycheck to paycheck. Here's how to avoid letting it happen to you.
By Tim Tomkowiak
A new report from Lending Club states that the amount of people living paycheck to paycheck has grown from 60% to 63%. This is a key indicator that inflation and rising costs of living are having an impact on everyday Americans.
Let's face it, no one wants to live paycheck to paycheck. The good news is that there is help! The first thing is to figure out where the problem lies. Some people make a lot or a decent amount of money but have bad spending habits, while others have decent spending habits but don't make enough money at the end of the day. The first thing you want to do is create a budget; this will allow you to see where all your hard-earned money is going
Now that you can see all your monthly expenses, the question is, how much money do you have left? A general rule of thumb is that you should have roughly 50% of your income going towards living expenses, such as housing, groceries, transport, cell phone, subscriptions, and entertainment, etc. Everyone's situation is different, but the goal is to have some money left over after all your expenses are paid.
Next, I want you to see what you can cut out and save on. Sometimes, we can save money by not eating out as much or working out at home instead of at the gym, for example. The less money that goes out each month, the more money you'll have in your pocket
Next, examine your income; are you being paid what you are worth? Sometimes, you need to increase your skill set or get a promotion. Focusing on and increasing your income can really make a big difference when you are living paycheck to paycheck. Some people work very hard and are good people, but they just don't make enough money.
The goal is to have extra money every month to save and invest. Also, having extra money allows you to cover those annoying unexpected bills that always seem to pop up. I know it's life and we need to be prepared with a rainy day fund. If we don't have money and an unexpected bill pops up, we will be forced to borrow money and this will keep us broke. It's way better to borrow from your rainy day fund interest-free and pay ourselves back over time.
In conclusion, you don’t want to live paycheck to paycheck. Follow the steps we discussed:
Create a budget
What can you cut out or save on
Increase your income
Save money and have a rainy day fund
You got this and I know you work hard. Lets follow these steps and not live paycheck to paycheck. I hope this helps!
Tim Tomkowiak
“I am a license loan officer. And I help ordinary people build equity and wealth through home ownership”
