More Than One-Third Of Americans Earning $200K Or More Say They're Living Paycheck To Paycheck

A Note From Patricia:

Hello and welcome to Forbes Advisor’s Weekly Brief, where each week we dive into the realities of consumer finance and empower you with knowledge to help make your financial journey easier.?

If you’re feeling stressed about affording your monthly expenses, you’re not alone. A recent Forbes Advisor survey revealed an alarming two in five (40.7%) respondents reported they’re living paycheck to paycheck, meaning they’re only able to cover their basic expenses without having any money left over.?

Respondents living paycheck to paycheck pointed to numerous contributing factors, but nearly half (49%) pointed to high essential expenses (like housing, insurance and utilities) as the primary cause. This week, we’ll take a look at how Americans are making ends meet, and how to strategically save if you’re in this boat.?

We would love to hear your thoughts or experiences in the comments section below. Have a wonderful day and hope to hear from you soon.

Sincerely,

Patricia Louis

Editor, Forbes Advisor

How To Break The Paycheck To Paycheck Cycle

Living paycheck to paycheck is a nuanced reality for millions of Americans that cannot be explained by simply suggesting they’re spending too much. Rising costs of living, paired with wage stagnation, means incomes aren’t going as far as they used to. Our survey included a stunning 39% of individuals earning $200,000 or more stating they didn’t have money leftover after covering their expenses.?

According to the survey, essential expenses including housing, insurance and utilities, were reported as the main culprit of why consumer budgets are stretched to the brink each month. Other factors included low income, unexpected emergencies, medical expenses and financially supporting family members other than children. More than one-fourth (27.5%) reported unnecessary spending as a contributing factor to their tight financial situation.

But regardless of the why, those living paycheck to paycheck are doing what they can to make ends meet. Some (63%) are making food at home or packing meals rather than ordering out; others are thrifting or making second-hand purchases to cut costs. More extreme sacrifices include considering moving to a more affordable state or country to avoid living paycheck to paycheck in the future.

It’s important to note that budgeting won’t help individuals facing extreme poverty. But for those who are living paycheck to paycheck despite having an above-average income, these tips can help break free from the cycle:

• Track your spending. Keep a watchful eye on your expenses to see what categories you may be overspending in. Some budgeting and banking apps allow you to set up purchase alerts for certain categories, or to be notified after you’ve spent a certain amount.?
• Set goals for yourself. Consider ways you can cut back on nonessential expenses. Try to avoid relying on credit cards or buy-now-pay-later services to prevent your debt from getting out of control. If you’re currently carrying costly credit card debt, commit to a debt payoff method so you can be free from monthly payments.?
• Continue with your budget. Even after you’ve paid down debt and reduced unnecessary spending, stick to your plan. You should begin allocating more money to your savings account, as the overall goal is to create a financial cushion for yourself so you can be prepared for emergencies or other unplanned expenses.

To learn more about Americans’ spending habits, as well as how to modify your own, click here.

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