My job takes me around the country talking to people about their financial health. What I have heard over and over is that there is nothing left at the end of the month. No matter how big or small the paycheck- most families couldn’t stay afloat financially if they lost just one week’s pay.
Today new statistics reaffirm what I have seen; more than four in 10 Americans are living paycheck to paycheck and nearly one in 10 doesn’t earn enough to pay for essentials. The study done for Allstate insurance by FTI Consulting, also revealed 8% of Americans don’t have enough cash to make it through the month. They can’t afford everyday essentials.
So 41% of us live from one paycheck to the next- that is where we are in this country. How we got here is important, but it is a story for another day. Today I want to address the reality of this new normal.
If you find you are part of the 41% here are some steps you can take immediately to start changing your situation.
1) Get Real
Know exactly what you have and what you spend every month. When you have a firm understanding of what you are dealing with you can create a smarter plan for changing course.
2) Be Vicious
No not to you friends and family but to your spending. Where can you cut immediately. Do it. No more excuses. Necessities are food, shelter and healthcare. End of story. If you don’t have the cash for cable, cell phones, dinners out, etc. then stop the spending.
3) Be Honest
To be vicious with your spending cuts you need buy-in from the family. When the entire family is on a mission it is an easier sell. Let everyone in on the problem and allow them to contribute ideas to a solution. Show spouses and older kids the money- or at least where you are spending the money. Ask for their suggestions on where to cut – rather than handing down and edict.
4) Map an End in SIght
Make the process finite. We need to cut our spending by $500 a month until we have $5000 in savings. Spelling out the terms to your fellow stakeholders (family members) and showing them how this will help everyone in the long run may not bring cheers but it will help create buy-in.
5) Follow Through
The greatest plans in the world mean nothing unless you follow through. Get mentally tough and make this happen. Isn’t it time you left the 41%?
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The survey of 1,000 Americans age 18 and older was conducted in mid-December. It has a margin of error of plus or minus 3.1% in 95 out of 100 cases.