This Generation Is Surprisingly Most Likely To Live Paycheck to Paycheck
According to a recent GOBankingRates survey, over 70% of Americans are living paycheck to paycheck at least some of the time, while nearly 50% of Americans are living paycheck to paycheck all of the time. Obviously, this can be a stressful way to live — and can become disastrous if anything goes wrong.
How To Survive on $500 a Month: A Frugal Living Guide
Learn: How To Get $340 a Year in Cash Back – for Things You Already Buy
You don’t have to stay living this way, though. There are steps you can take to get ahead so you don’t have to stress over when your next paycheck is coming in. Let’s review the details of our survey and go over a few expert tips to help you break the cycle once and for all.
The Generation Living Paycheck to Paycheck the Most
The generation most likely to be living paycheck to paycheck is millennials. Specifically, older millennials, those aged 35 to 44.
According to our survey, 58% of participants in this age group reported they are currently living paycheck to paycheck, while another 22% said they live paycheck to paycheck some of the time.
The generation least likely to be living paycheck to paycheck are those aged 65 and older. This may not be surprising, considering many baby boomers are now retired.
What is surprising is that just 38% of Gen Z respondents are currently living paycheck to paycheck, according to the survey results. Overall, millennials are struggling the most, and even if earnings are up, day-to-day financial challenges are very much a reality.
What Is the 75/15/10 Rule? A Simple Path to Financial Wellness
How To Break the Paycheck-to-Paycheck Cycle
While millennials and other generations report a high percentage of people living paycheck to paycheck, there are a few things you can do get out of this situation. Here are some steps to take to start taking more control of your money.
Track Your Income
Before you can start saving any money, you need to know how much money you have coming in. Especially for those who have inconsistent income, or are working side gigs, tracking your income is imperative.
This includes writing down all of your income sources, and how much you expect to earn each month. If your income is variable, you may need to estimate what your average income is over a period of a few months. Total it up so you know how much you are working with each month.
Track Your Expenses
Once you know what your income is, it’s imperative to get down into the nitty gritty details of your spending. This means reviewing where your money HAS been going (past spending), and keeping record of where it will be going (budget).
There are plenty of great budgeting apps that can help you track your spending automatically. Some even categorize everything for you, giving you easy-to-read spending reports. Keeping an eye on your expenses can help you avoid waste, and save more.
Negotiate Your Bills
In addition to tracking your expenses, you’ll want to find ways to save money. This includes your fixed expenses, such as utilities, cell phone bills or car insurance.
“The number one place to start is to evaluate your spending habits,” said Carman Kubanda, CFP and financial planner at Innovative Wealth Building. “There’s usually some place you can cut back and divert those dollars each month to savings.”
One way to save is to focus on lowering your bills by negotiating them down — or changing service providers altogether.
For services like internet or cell phone, you can call your company and ask if there’s a better plan option with a lower price. Providers may have a better option available. If they don’t you can call competitors to get quotes and potentially switch providers to save up to 50%!
For insurance providers, it’s always a good idea to check with a competitor every 6 to 12 months. Most insurance companies are incentivized to bring in new clients, and will offer massive discounts to get you to switch providers. Get a few quotes or use a service like Policy Genius to get multiple quotes in one place.
Lowering your fixed expenses can save money every month going forward, and can help you stack more savings to help break the paycheck-to-paycheck cycle.
Automate Your Savings
As you find ways to save money in your budget, it’s important that the savings actually gets transferred to a savings account. This keeps you from spending it on other things, and lets you start growing your emergency fund.
“The trick is whatever you can cut out, don’t replace [it] with spending on other things,” said Kubanda. “Put those dollars directly into savings to accumulate a safety net.”
One of the best ways to guarantee savings is to automate it. You can set a predetermined savings amount to transfer over after every paycheck, saving money in the background and forcing you to live without those funds.
Most savings accounts let you set up a recurring transfer at a specific interval, allowing you to automate your savings, remove temptation to spend it, and grow it without thinking about it.
Find Extra Money
In addition to saving money, there are some great ways to find extra money — and it might by lying around your house! Here are some examples:
Sell Stuff: If you have extra stuff, you can make a few dollars by selling it. The easiest way is via Facebook Marketplace or eBay. You can take a few nice pictures, write up a compelling description, and list it. You might be able to come up with a few hundred dollars quickly by doing this.
Get a Side Job: Side hustles are easier than ever today, with access to rideshare and delivery service jobs with flexible schedules, as well as the ability to make money online. Picking up a side job can help you quickly build up a cushion to escape the paycheck-to-paycheck lifestyle.
Save Your Tax Return: If you’re expecting a tax return, simply stack that cash into your savings account instead of spending it. This can help you stop stressing about your next paycheck and have money to fall back on if needed.
Utilize Extra Paychecks: If you’re paid bi-weekly, you should have a three-paycheck month twice a year. If you don’t account for this paycheck, you can simply bank it and build a buffer to help you stop living paycheck to paycheck.
Get One Month Ahead of Your Expenses
The goal of saving money and side hustles is to eventually get one month ahead of your money. This gives you a sizable emergency fund to help pay for unexpected expenses, and will help you stop relying on that next paycheck.
More From GOBankingRates
I'm a Bank Teller: Here Are 10 Mistakes You Are Making With Your Banking
Use This Checklist To See Whether Your Bank is Costing You a Lot of Money
This article originally appeared on GOBankingRates.com: This Generation Is Surprisingly Most Likely To Live Paycheck to Paycheck
