This is from an interesting survey you can review in total at the link below. I picked out only one section to make a point about our perception of people handling money. Note the words “Once essentials are paid, there’s no money left over for savings.” The key word is essentials.
While that may be true for the lowest income group, it is not true for anything close to the majority of the country. It’s not the essentials that get most people in trouble, it’s the discretionary spending AND the inability to understand the difference between essential and non-necessities.
No. 3: 78% of adults live paycheck to paycheck
According to a 2017 CareerBuilder survey, the majority of the country is living paycheck to paycheck. Living paycheck to paycheck means you are spending most or all of your monthly income on expenses. Once essentials are paid, there’s no money left over for savings.
Americans stuck in a hand-to-mouth cycle often feel limited by their financial situation. If savings run out, what’s their Plan B? For many Americans, there isn’t one.
We’re seeing this play out across the nation. Given the current economic downturn due to the pandemic, the number of Americans struggling to make ends meet is likely exacerbated. Jobless claims now total 33.5 million Americans. At a time like this, the stark statistic hits close to home.
Source: 10 Eye-Opening Financial Literacy Statistics – OppLoans
QUINNSCOMMENTARY 
My wife and I found ourselves living paycheck to paycheck in 1993. We were renting. We decided it was the rent that was killing us. We did have some savings, but we could no longer save more. So we took all our savings and, with that as down payment, bought a house in 1994, with a $90K mortgage. No more rent. But also, no more savings. Since my wife and I had retirement pensions, this has worked out okay for us.
When you find yourself in retirement trouble, more saving is not always the answer.
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“ My first mortgage broker told how many I could borrow way back in 1986. I laugh at him. I told him how much I could afford.”…
Similar to my experience. I asked the RE Agent if I was supposed to eat franks & beans the rest of my life. It turned out to be not that bad after refinancing from 10% to 8% to 6% mortgage rate and a couple raises. The final refinance I went to a 15 year mortgage, and the payment was less than I was paying for the 30 year mortgage at 10%.
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One way to break the cycle of people living paycheck to paycheck or as I like to call it, spending all of their paycheck on “wants” instead of “needs”, is to require that people be unemployed for 60 days before they can start collecting unemployment. They also will not be eligible for back unemployment for those first 60 days. After a while of horror stories, people will learn to have an emergency fund and make savings a priority over the non-essentials “wants”.
Of course I realize what a humanitarian disaster this would cause if it where ever to happen especially in the lower incomes households. But there are plenty of six figure wage earners who buy that fancy car because monthly payments are not consuming all of their paycheck.
Instead, governments around the world have been handing out covid-19 money for nothing, re-enforcing the ideal that big government will take care of you so that you don’t have to save any money.
Why did covid money go to retirees? My income never changed nor did the people who did not lose their full time jobs.
The government also re-enforces this idea with FHA loans with 2% down. If you can’t save 5%, then how are you going to maintain your house? Do you even have enough to pay the loan and other essentials.
My first mortgage broker told how many I could borrow way back in 1986. I laugh at him. I told him how much I could afford.
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