Living paycheck to paycheck isn’t ideal, yet that doesn’t stop 62% of Americans from living in that matter. If you constantly feel you can’t keep your head above water financially, it’s time to look in the mirror. All people living paycheck to paycheck are guilty of these financial blunders; how many apply to you?
#1. Only Making Minimum Payments
Unfortunately, although making minimum payments on your bills is admirable, you’re ultimately doing yourself no favors. Minimum payments still incur hefty interest fees; in many cases, the interest accrued is more than the minimum payment itself! To truly pay off bills responsibly, you should devise ways to pay off your balances in full (or, at the very least, make more than the recommended minimum payment).
#2. Too Many Subscriptions
Let’s face it: In 2023, most of us subscribe to way too many services. From Netflix and Hulu to Spotify and Apple Music (and everything in between), countless services effortlessly take tiny monthly fees from us. In fact, this could very well contribute to our bleak financial situation! If you are struggling paycheck to paycheck, one of the first things you should do is take stock of what you’re subscribed to and make cuts wherever possible.
#3. Societal Pressure
Keeping up with society’s trends is exhausting; status symbols are everywhere, and unfortunately, they all cost significant money! However, “Keeping up with the Joneses” is a financial pratfall that wreaks havoc on millions of people’s bank accounts! Ask yourself, do you need to upgrade your smartphone every year? Do you need to be seen driving the newest cars while running errands? In most cases, the answer to these questions is resounding, “No.”
#4. Lack of Planning
Unfortunately, many people don’t have the foresight to adequately prepare their financial futures for success, resulting in them living paycheck to paycheck. It’s a sad state of affairs; too many men and women prefer to ignore warning signs and live in a state of willful ignorance instead of setting themselves up to be financially successful! A lack of planning is one of the main reasons Americans are struggling in 2023.
#5. No Emergency Fund
Believe it or not, I consider living paycheck to paycheck an emergency. It’s one of the most dire financial situations a person can find themselves in (even if it doesn’t always feel that way). What would come in handy in this situation? That’s right, an emergency fund! An emergency fund exists primarily to relieve pressure; it’s a “break in case of emergency” fund that can mean the difference between considering bankruptcy or finally getting your head above water.
#6. Late Bill Payments
I can’t overestimate how important it is to pay bills on time. Not only does it negatively impact your credit score, but it instills a lack of urgency on consumers. Sure, you won’t get arrested for paying a bill past its due date, but the result is arguably just as catastrophic. If you consistently pay bills late, consider taking out a small personal loan to get back on track. Otherwise, you’ll find it near-impossible to stop the paycheck-to-paycheck lifestyle.
#7. Impulse Buying
Tiny, near-imperceptible impulse purchases go a long way to ensuring anybody will stay living paycheck to paycheck. Nobody needs Starbucks every morning; nobody needs to grab a soda or energy drink every time they fill their vehicle with gas. By cutting back on impulse buying, you’ll find significantly more money in your account, leading to getting yourself out of the vicious cycle.
#8. Not Knowing Your Worth
It’s sometimes too easy to be complacent with jobs and work, but not knowing your worth severely restricts your earning potential! Your occupation (and pay grade) may be to blame if you constantly live paycheck to paycheck. If you have unique skills or traits that make money for your company, demand proper compensation that reflects your impact.
#9. Predatory Automobile Loans
While automobile loans are a necessary evil in today’s society, getting suckered into a predatory loan helps keep even the most sensible person underwater. Living paycheck to paycheck is exceedingly difficult when you are saddled with a substantial monthly car payment (paired with a sky-high interest rate, of course). Getting yourself into a more sensible mode of transportation will help ease the financial burden.
#10. Laziness
Being lazy is a harsh accusation, but it’s fair in the financial literacy world. It’s easy not to care about your financial situation. It’s easy to “kick the can down the road” and ignore your responsibilities, but trust me, they will eventually catch up to you! Being lazy isn’t a temporary trait; training yourself to be proactive will take discipline. Sadly, living paycheck to paycheck is a byproduct of being lazy.
#11. Ignoring Your Bank Accounts
When I was younger, I was one of countless 20-somethings who refused to look at their bank accounts. It was an “out of sight, out of mind” situation, and I knew I wasn’t alone in my strategy. My bank account was always so low that I knew looking at it would ruin my day. But honestly, ignoring your problems never solves them, and the day I started facing my bank accounts head-on was when I began living more fruitfully than paycheck to paycheck!
#12. Not Paying Yourself
Many believe the key to getting out of the paycheck-to-paycheck grind is paying yourself! What this means is straightforward: Every time you receive a paycheck or income, transfer a pre-determined percentage to another account. The transfer amount doesn’t necessarily have to be significant; smaller amounts tend to fly under the radar, and over time, your separate “pay yourself” account will grow surprisingly! Before you know it, you’ll have a backup account with enough money to get yourself out of the rut.
#13. Credit Card Recklessness
Interestingly, 80% of consumers who live paycheck to paycheck have at least one credit card, with many having two or more. Responsible credit card use is easier said than done; if you pay off your total credit card balance monthly, you’re golden. However, suppose you let your balance increase over time. In that case, you’ll incur devastatingly high fees that will do you zero favors. If you’re struggling financially, determine whether you’re being reckless with everyday credit card spending.
#14. Ignoring Budgets
Blowing through weekly, monthly, or yearly budgets is a perfect example of a lack of discipline to succeed financially. Remember, budgets exist for a reason! Putting your expenses and associated income down on paper should give you a clearer perspective on your financial situation; ignoring these figures will spell disaster.
#15. Zero Savings
If you neglect your savings account, you’re ostensibly neglecting your future, so in theory, it shouldn’t surprise anyone that you’re living paycheck to paycheck. Putting aside small amounts of cash monthly toward a savings account shows forward-thinking, accountability, and financial savviness! Many regard their savings account as a safety net and report feeling greater peace of mind when their accounts are plump with cash! (Who wouldn’t?)
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The content of this article is for informational purposes only and does not constitute or replace professional financial advice.
