The sad situation described in this article is that a nationwide online study of 25,000 American adults found that while “just over two-fifths of respondents (41%) report spending less than their income, 36% spend about EQUAL to their income, and 19% spend MORE than their income.”
Only 35% are “certain they could come up with the full $2,000” if an unexpected need for $2,000 came up within the next month. Similarly, 40% claimed to have set aside 3 months or more in an emergency fund.
What happens when you consistently live paycheck-to-paycheck?
- You go into serious debt if income stops coming in, and then you pay high interest on that debt
- You are always stressed out about financial risk and hardship
- You aren’t able to build sufficient emergency savings
- You will never save anything for retirement and will be working until death
- You will never achieve financial independence
- You will not be able to save up for an occasional vacation, home improvement, education, etc.
- You really can’t work towards ANY future goals that are reliant on saved assets