According to the recent statistics 61% of Americans live from paycheck to paycheck. Impressive and dramatic figures, aren’t they? It means that more than half of the population can hardly get through.
Living Paycheck to Paycheck figures and possible reasons
In this relation our generation can be called Paycheck to Paycheck. There can be mentioned lots of reasons why people live like that:
- They have lots of unexpected impressive expenses;
- They don’t know how to plan budget wisely;
- They don’t save money.
- They lack necessary skills to find a better job with better salary.
The statistics provided by https://www.bankrate.com/finance/credit-cards/living-paycheck-to-paycheck-statistics/#paycheck shows dark prospects that less and less people tend to save money. The table below describes how people who belong to different generations try to economize.
|Percentage of those who aren’t saving and have no existing savings
|Baby boomers and seniors
The table shows that less than ⅕ tends to save money. This is quite dramaticcontents ↑
What does it mean when you live paycheck to paycheck?
Correlation between Living Paycheck to Paycheck and your credit
Living paycheck to paycheck at first sight may seem not having a direct impact on your credit. But in reality it is not really so. Picture this: you’re strapped for cash, so when you need to make a big purchase, you whip out that trusty credit card. By opting to a credit card your debt can affect your credit score. Those pesky late payments that tend to haunt those of us living paycheck to paycheck shouldn’t be also disregarded. According to a recent Bankrate survey, a whopping 35 percent of U.S. adults are carrying credit card debt from month to month. That’s a jump from 29 percent in the previous year. Now, throw in the ever-present monster of inflation and rising interest rates, and you’ve got yourself a recipe for even more credit card interest. It’s like a never-ending cycle. You see, most credit cards come with variable interest rates tied to the prime rate. So, if you can’t keep up with those payments while living paycheck to paycheck, failing to make the minimum payment can wreak havoc on your credit. Besides, having poor credit will only make borrowing money more expensive. It’s a vicious cycle that can lead to more debt and higher interest rates.contents ↑
How to break the vicious circle?
Living paycheck to paycheck makes it difficult to build a secure financial future as for many families it is a challenge to cover even everyday expenses. Today we live in turmoil due to some economic and political situations. They are making life harder and harder. Though, an old saying says that every cloud has a silver lining. Paycheck to paycheck statistics is not encouraging, but the situation can be improved. There are certain steps to be taken to stop living paycheck to paycheck. They will help you to create a stable financial future.
1. Create a budget and cut your expenses: Don’t spend more than you earn. We tend to buy more unnecessary things. In the result we don’t use them at all and there can be formed a hole in our budget.
2. Aim at debt repayment: If you have outstanding debts, aim at paying them off. It is advisable to launch the process with high-interest debts. Then you can continue with others. By doing this step you will save money in the long run.
3. Build an emergency fund: Saving money within three or six months will help you to form your emergency fund. Unseen expenses such as car repair or sudden illness are cutting your budget, but if you will be prepared by having savings these sudden expenses won’t hurt your budget that much.
4. Consider additional sources of income: Pause to think about taking a side job. This can provide extra cash to help you get ahead financially. Today there can be found lots of offers and alternatives. Just a couple of extra working hours a day can help a lot.
5. Avoid unnecessary debt: Payday loans online near me can be really tempting. But if you cannot pay back what you’ve taken before, there will be only a growth of your debt.
6. Save on groceries and meals: Planning meals, using coupons, and shopping for sales can help you to save a lot. Cook at home instead of visiting restaurants or cafes.
7. Increase your earning potential: Enhance your career prospects by improving your professional skills. Attend courses, read more books and open new professional horizons.
By implementing these tips, you can gradually move away from living paycheck to paycheck and establish a path for a more financially stable future.