• Personal Finance
  • Are You Living Paycheck To Paycheck?

    Living paycheck to paycheck is an accurate term for describing an individual with insufficient funds who would otherwise be unable to fulfill all financial commitments if unemployed. Those living paycheck to paycheck mainly devote their monthly incomes to daily expenses. However, living paycheck to paycheck can also mean living on less than adequate savings and also refer to individuals in greater financial risk than those who have more savings. This is because a person who is living on lesser savings when abruptly unemployed would still be relying on his savings for the remainder of the period of his employment.

    A person who lives paycheck to paycheck has the difficult task of managing his expenses carefully as confirmed by Debt Busters The savings could be used to meet emergency expenses such as medical bills or even repaying some debts. Or, it can be used to reduce other expenses such as grocery expenses or take a holiday. More importantly, those living paycheck to paycheck must ensure that their after-tax income covers at least the basic expenses, leaving at least some savings. This can be done by increasing the amount of working time and decreasing the non-essential expenses like television, internet, telephone, etc.

    Among U.S. adults, 35% of those living paycheck to paycheck are actually retired. Thus, their retirement savings have enabled them to be able to live comfortably despite having to earn their retirement pensions. Most of these retirees are not only living on lesser income but also endow with extra expenses such as insurance, taxes, hospitalization and health care, leaving little or none to their pension.

    Many people fall into this trap of using their savings money to increase their spending instead of saving money for tomorrow. Thus, they have more debts and spend more than what they have saved. Instead, people should be looking for ways in which they can save more which could help them in emergencies. Small changes like quitting cigarettes, spending less on restaurants doing your laundry, etc can have a big change. Similarly subscribing to a free phone service (like this) can help low-income families to save some extra money that would have otherwise gone into paying telephone bills. Small steps can drastically change people’s financial lifestyle. Many people start to get into trouble when they spend more than what they earn because they tend to spend without thinking. Others, on the other hand, tend to save but end up spending most of their savings and running out of cash before getting another payday.

    Recent survey respondents were asked if saving money and spending it would make a difference in their lives. The majority of the survey respondents answered “yes” to both questions. They stated that saving money is important especially during economy crisis. Moreover, most of these same respondents also said that they enjoy working hard every day in order to earn their monthly paycheck and maintain their basic necessities.

    Most of these survey respondents were from the baby boomers’ generation, which was born during the time of the Great Depression and the World War II. Baby boomers are known to be conservative financially. They are less likely to save money for the future and think that it is not important to save. It seems that many of the boomers are stuck in their ways and have not yet learned to adapt to changing times.

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