by Maurie Backman | Dec. 18, 2019
When it comes to bad financial habits, millennials aren't the worst offenders out there.
Living paycheck to paycheck is a terrible cycle to be trapped in. It's also, often, an unavoidable one.
When you have zero savings and find yourself all-too-eagerly anticipating your next payday just so you can cover your immediate bills, it can make for an extremely stressful situation. But surprisingly, millennials are the least likely among all generations to uphold a paycheck-to-paycheck existence.
The Ascent's recent study on how Americans define the middle class revealed that 39.8% of middle-class millennials live paycheck to paycheck. By contrast, 40.5% of Gen Xers and 44.5% of baby boomers do the same. And that means that millennials are doing a relatively good job of managing their money compared to their older counterparts.
Still, the fact that nearly 40% of middle-class millennials have no wiggle room financially isn't great. If you're caught in the paycheck-to-paycheck trap, it's time to bust out of it. And the sooner you do, the better.
There are some people who live truly modest lifestyles, paying only for necessities, and still wind up living paycheck to paycheck. But for others, that existence stems from poor money management coupled with a failure to set priorities. Therefore, be honest with yourself. If you fall into the latter camp, chances are there are expenses you can cut back on to free up cash on a monthly basis and build some savings in the process.
To better identify those bills, get yourself on a budget. That will give you a clear picture of where your money currently goes. From there, make a few sacrifices. Cutting back on leisure, or even going to a greater extreme, like downsizing your home or giving up a car you could technically get by without, could bring you a lot more financial security.
Another good way to bust out of a paycheck-to-paycheck cycle is to boost your earnings, and while you can't just march into your boss's office and demand a raise, you can increase your wages by taking on a second job. That job could entail shift work at a retailer, restaurant, or another type of business, or it could mean joining the gig economy and doing something independently, like designing websites, selling homemade crafts online, or getting paid to blog. A nice boost in your earnings could make it possible to start padding your savings account, which will give you a nice cushion to work with.
People who live paycheck to paycheck don't have an opportunity to save money, and that's problematic. Without emergency savings, you risk racking up serious debt, or other dire consequences, when unplanned bills land in your lap. You also need to build retirement savings steadily throughout your career to ensure that you have enough income at your disposal during your golden years.
The sooner you stop living paycheck to paycheck, the more financial security you'll buy yourself, so revisit your current lifestyle and work on boosting your earnings, even if it means you have to hustle to do so. It won't be easy, but the peace of mind you'll get in return will make it more than worth the effort.
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