It’s estimated that ~78% of workers are living paycheck-to-paycheck. Scary, but not surprising. People from all walks of life are scraping by and struggling through life – regardless of gender, education or income levels.
PwC’s 8th annual Employee Financial Wellness Survey, 2019, also notes that more and more people experiencing financial difficulties:
- 49% of all employees say they find it difficult to meet household expense on time each month
- Only 31% would be able to meet their basic expenses if they were out of work for an extended period of time
- 59% consistently carry balances on their credit cards, with 37% finding it difficult to make their minimum payments each month
- 35% of Millennials and 30% of Gen X employees are using their credit cards to pay for monthly necessities which they could otherwise not afford
Most worryingly of all is that 45% of people surveyed have less than $1,000 saved for unexpected expense. Unfortunately this situation is worse for women, with 51% not having this relatively small amount of money put aside vs. 38% of men.
The situation is dire and getting worse. It’s time to do something about it, because living paycheck-to-paycheck is a disaster not only for your immediate finances but also your general wellbeing, happiness and future living standards.
Mental and physical wellbeing
To put it bluntly, living week-to-week, paycheck-to-paycheck is not good for your physical or mental health!
PwC’s survey respondees cited that financial matters are causing the most stress in their lives (59%), well in excess of other factors combined. This was universal across all generations and regardless of gender.
The PwC survey also notes that financial worries also affect other areas of life, with one in three noting negative health impacts. Similarly, about a third of respondees noted relationships at home were impacted by financial concerns.
Short term stress can be beneficial but constant stress, left unchecked, can contribute to many health problems, such as depression, high blood pressure, heart disease, obesity and diabetes. Stress affects many parts of the body including the muscular, respiratory, cardiovascular, endocrine, gastrointestinal, nervous and reproductive systems.
Better handle life’s inevitable road bumps
Living paycheck-to-paycheck also gives you no ability, beyond perhaps using your credit card, to handle unexpected surprises, bills, or emergencies.
Having no savings can turn a little problem into a big drama. Small or large expenses can’t be paid without relying on debt. It’s a cause and effect spiral that’s difficult to pull yourself out of.
S@#t happens! Whether it be car repairs, a broken washing machine, unexpected medical costs or losing a job, there will be inevitable bumps in the road. That’s life, so put some money aside and start an emergency fund. Until that happens, you are exposed and vulnerable.
Able to look to the future
Once you’ve addressed the emergency fund and broken the cycle of holding on desperately for the next pay day, you can start tackling debt, putting money aside for retirement, investing and ultimately you might want to work towards Financial Independence.
Putting your finances in order not only provides a safety net but also gives you options. Maybe it’s more confidence to negotiate a salary increase or reduce your hours at work to pursue a passion project. Maybe it’s the ability to travel more. Maybe it’s the peace of mind knowing you have enough money put aside for your kids’ college expenses or future retirement.
The future becomes something to look forward to rather than dread when you aren’t living paycheck-to-paycheck.
Simple steps to break the cycle
The reality is that we all probably know the answer to this already. Like being physically healthy (eat less, exercise more), addressing your financial health is common sense. The simple answer is spend less than you earn.
It’s not necessarily easy, but the path forward is clear if you want to have a more sustainable, happier and healthier life:
- Have an emergency fund
- Start a budget
- Track all your spending
- Avoid impulse buys
- Cut your expenses
- Eliminate debt
- Save more
- Change your attitude towards material things and the need for more stuff
- Invest the difference
Good luck on the journey if you are one of the many many people struggling paycheck-to-paycheck. Believe me, the short term sacrifices needed to break the cycle are worthwhile and life changing. Rather than reacting to life’s little hand grenades, you’ll now be in control and they won’t be able to derail you from pursuing your dreams and best life.
Thanks for reading
Mr Simple Life