An overwhelming portion of the American population lives paycheck to paycheck, presumably counting down the days to when they get paid. According to a 2017 study from Career Builder, “more than three-quarters of workers (78 percent) are living paycheck-to-paycheck to make ends meet — up from 75 percent [the year before].” Digging slightly deeper into the data, Career Builder found that the trait is more common in women than men — 81 vs. 75 percent, and that having a higher salary doesn’t necessarily mean that workers aren’t still looking forward to the first and the fifteenth. In fact, nearly one in 10 workers making $100,000+ live paycheck to paycheck.
Not only does this create stress, but it leads to poor planning. More than 1 in 4 workers do not set aside any savings each month, and when times get tough, for example, when there’s a government shutdown, people turn to less trustworthy institutions. Pawnshop chains and payday lenders, contentious institutions in our capitalist economy, seem to flourish during events like government shutdowns. According to the Financial Times, “shares in World Acceptance, a South Carolina-based short-term lender, are up 22 percent since the shutdown took effect about a month ago. EZ Corp, a pawnshop operator based in Austin, Texas, is 20 percent higher over that period. In both cases, the rises are much more than benchmarks, suggesting investors could be betting on a surge in demand to cover unexpected expenses.”
So what can you do to move away from living like this? Well, first of all, it’s tough, there’s no getting around the fact that no matter where you live, or how much you make saving money is hard. With that said, however, it starts with discipline. Just like losing weight or quitting smoking, it requires sticking to a plan and putting aside short term pain for long term gain. America Saves recommends a host of things you can do to help save, but the three that stuck out were establishing a budget, setting up automatic savings, and building an emergency fund. Ideally, you won’t have to dip into this rainy-day fund, but if and when the next shutdown rolls around again, you may have something more to lean on rather than seeking out a pawn shop or payday lender.