America is seen as the land of the free, a place where someone can make a success of themselves, no matter what their background..
While everyone is free to do what they desire (within the law) and say what they want to say, ‘freedom’ is not always real when it comes to some of the financial restraints on people. For many workers and even the middle class income earners, financial struggles are becoming a real burden.
Many Americans are quite literally living from paycheck to paycheck. It’s estimated that an unexpected bill of just $500 to $1,000 could push most budgets over the line.
Reportedly, well over 40% of Americans are living from paycheck to paycheck and couldn’t cover such a large bill. Many are not following any form of budget in their household, and aren’t saving enough (or anything) each month.
With the constant use of credit cards and overdrafts, many households are currently also in high levels of debt and struggling to keep up with repayments.
How to move away from living paycheck to paycheck
Living paycheck to paycheck can be fun in the ‘here and now’ or even seem ‘necessary’, but long term it could end in disaster or a far less comfortable lifestyle. So, let’s look at how you can break the cycle.
- Set up a budget that has some flexibility. By having a flexible budget, you are more likely to stick to it long term.
- Review your obligations and decide which are necessary and which are not. By cutting out those that aren’t necessary, you could greatly reduce your outgoings.
- Check your debts and particularly their interest rates. By refinancing your debts, You could greatly reduce the cost of interest and repayment amounts required on a monthly basis
- Check that you have valuable items insured, although the insurance is an additional expense, replacing valuable items can prove far more expensive.
- Consider your happiness and the happiness of your family. What do you actually need to be happy, and what is actually wasting or tying up your money?
- Consider the future as a motivational factor. If you got an unexpected bill, could you end up losing your property? Are you saving enough to cover retirement or future education costs? What would happen if someone in the household got sick?
If you seriously look at your finances and savings at the moment, could you honestly say that you could afford an unexpected $1,000 bill without struggling? Or even possibly losing your property?
What if the main income earner in a suddenly became sick? Could you survive without the income for 2 months or more?
It really is quite concerning that there is such a large number of people in America for whom a single missed paycheck could drive them into the poverty line.
What is even more shocking, is that this is not just restricted to the lower income brackets of the population. Many Americans that are earning over $100,000 per year are also living paycheck to paycheck.
While living expenses have increased, a lot of the issues are actually caused by society’s ‘expectations’ of what people should have and by not considering the items listed above.
How about you? Are you living paycheck to paycheck? If you are, try our suggestions above and try to at least save some money for emergencies.