Everyone lives paycheck to paycheck …almost

Exactly what is living paycheck to paycheck?

Paycheck-to-paycheck means a lifestyle in which a person does not save money and would incur significant financial stress if he or she does not receive his or her next paycheck.

Paycheck to paycheck is an expression used to describe an individual who would be unable to meet financial obligations if unemployed because his or her salary is predominantly devoted to expenses. Persons subsisting paycheck to paycheck have limited or no savings and are at greater financial risk if suddenly unemployed than individuals who have amassed a cushion of savings.

The thing about living paycheck to paycheck is that it can occur at just about any income level. That’s because for all but the lowest income group, it has as much to do with spending and lifestyle as it does income.

Before jumping to conclusions about who can’t save, we need to make sure we understand the difference between expenses and spending.

If your income is right of the red line and you can’t save, spending is probably part of the problem.

Living paycheck to paycheck is normal? Apparently so.

63% https://www.cnbc.com/2020/12/11/majority-of-americans-are-living-paycheck-to-paycheck-since-covid-hit.html

59% https://www.investopedia.com/articles/personal-finance/091015/why-high-earners-still-live-paychecktopaycheck.asp

50% to 74% https://www.marketwatch.com/story/a-shocking-number-of-americans-are-living-paycheck-to-paycheck-2020-01-07

78% https://www.forbes.com/sites/zackfriedman/2019/01/11/live-paycheck-to-paycheck-government-shutdown/?sh=3e0024de4f10

60% https://www.pymnts.com/coronavirus/2020/navigating-pandemic-consumers-paycheck-to-paycheck/

49% https://www.forbes.com/sites/zackfriedman/2020/02/19/financial-survey-debt-loans-credit/?sh=699121071578


  1. I have never lived paycheck-to-paycheck. When I was younger, I lived off my bank checking account. I learned to do things this way from my parents. These days, I live off my credit cards, since that’s more convenient. My main credit card company has my permission to reach into my checking account every month and pay down my current CC bill.
    But I have an idea what paycheck-to-paycheck living is like, from watching the guys I worked with at an automotive plant, when I was in high school. On payday, at lunch break their gazes brightened and they’d stream across the road to the bar to cash their checks, eat, and have a few beers. I assume their families didn’t necessarily see any of that money.

    Liked by 1 person

  2. A caveat on my comments first. No financial adviser has ever stated to have an emergency fund that should last a year. This pandemic has forced many people to live paycheck to paycheck. If you are a chef and got shutdown, it is not like you can find another chef job in a month or two because nobody is allowed to be open or fully open. My comments do not apply to these people who were put out of work by the pandemic and have exhausted any savings that they may have had.

    With that said. There is a big difference between living below the poverty line and living paycheck to paycheck. Living below the poverty is just not have the skills or the income to meet your basic needs of food and shelter. These are the people that need help and there are many programs available to help them. Their effectiveness is a whole another topic.

    Living paycheck to paycheck is a personal choice or it is often self inflicted. A $200k student loan for a job that only pays $30k / yr is probably not a good choice. Becoming house poor with a mortgage and then needing a new car loan is probably not a good financial choice. Eating lobster when you should be eating can tuna is a choice. Eating out or buying your lunch everyday is a choice.

    I personally consider myself very well off. I have a steady retirement income and just bought a new car at 0% interest as my only debt that I could have paid cash for. (Made sense to keep the most of the money invested over the next 5 years rather to withdraw it all at once). But I still live paycheck to paycheck. That is I will not go into debt on my credit cards if I don’t have the money to buy something. My wife and I will not go out to eat if we spent too money early in the month. If we have to wait a week or two, we’ll wait. The difference between me and others is that I have a large amount of money in the bank and I will survive. I still put money away every month for unknown future big ticket items so that I don’t have to put it on a credit card or take a loan.

    So if the a survey or a pollster frames a question the right way, yes I am living paycheck to paycheck. My choice is not to live beyond my means but just below my means. There probably are a few people who make money just to make money and do not spend the money. For the rest of us, what is the point of earning money if you have no intention of spending it. The key is not spending more than you make and having a reserve in the bank. But it is no reason for politicians to get involve because they will only make it worse.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s