We're told we're supposed to budget our money wisely. Not only that, but we're supposed to set aside a portion of each paycheck in savings, whether it's 10%, 15%, or more. But new data from CreditLoan tells us that most workers aren't heeding this advice. In fact, only 25% of working Americans consistently spend their income responsibly, which means most employed adults have a tendency to blow their money without giving it enough thought.

The problem, of course, is that Americans on a whole are lacking in savings. A good 57% of adults have less than $1,000 in the bank, and 39% have no savings at all.

A person hands over a paycheck

IMAGE SOURCE: GETTY IMAGES.

We're not doing much better on retirement, either. It's estimated that nearly half of U.S. households have yet to contribute money to an IRA or 401(k). 

Clearly, the paycheck-to-paycheck lifestyle isn't a financially stable one -- yet it's one that a whopping 75% of workers maintain. If you're one of them, then it's time to start using your paychecks responsibly, even if that means making major lifestyle changes along the way.

Why are so many Americans blowing through their paychecks?

For some people, spending down their entire paychecks is a matter of not earning enough and having too many bills. But for others, it boils down to sheer recklessness. In fact, when asked why they use their pay irresponsibly, 15% of Americans responded with having fun or improving their moods. Meanwhile, 10% chalked it up to classic impulsiveness, while 7% cited a lack of budgeting or planning.

Here's the deal, though: No matter why you're blowing your paycheck, it's a habit that could catch up with you quickly. For one thing, if you don't have emergency savings, you could wind up in serious credit card debt the moment an unplanned bill lands in your lap. Furthermore, if you fail to set aside money for the future, you'll risk struggling financially during your senior years -- perhaps the most vulnerable point in your life. Right now, in fact, a frightening 25 million seniors live at or below the poverty line, and a big part of that has to do with entering retirement with inadequate savings.

The solution? Get better about how you spend your paychecks. Otherwise, you'll only continue down an already dangerous path.

The smart way to manage your income

It's natural to spend the bulk of your paychecks on living expenses and indulges each month -- but that doesn't mean you should be spending all of that money. At a minimum, you must set aside 10% of each paycheck you receive for emergencies or the future, though ideally, your target should be 15-20%.

How do you get there, especially if you're used to spending down your paychecks in their entirety? It's simple: reprioritize. Examine your monthly expenses and decide which ones you're willing to cut. Maybe it's the cab ride you take twice a week. Maybe it's the store-bought lunches you're perfectly capable of making yourself. No matter which expense category you choose to tweak, you'll need to give something up if you want a shot at financial security, both now and in the future.

Meanwhile, as you're slashing expenses, set up an automatic savings process wherein a portion of each paycheck is sent directly to the bank or a retirement plan. Your first priority above all else should be to establish an emergency fund, so if you're lacking there, filter a chunk of each paycheck to land directly in savings. Once you're OK on near-term cash, allocate a portion of each paycheck to your employer's 401(k). And if your company doesn't offer one, sign up for an IRA and do the same. The key is to send that money into savings-land before you even get access to it, thus eliminating the possibility of spending it negligently.

While we should all feel free to enjoy a healthy dose of instant gratification now and again, the fact that most of us aren't properly managing our paychecks is a huge problem. And if we don't take steps to fix it, we risk damaging our finances beyond repair.

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