I know plenty of people making $250K/yr or more who are living paycheck to paycheck.
At that point, it's not really the company that's the problem...
At that point, it's not really the company that's the problem...
Many of those people living paycheck to paycheck have a budget where they're saving or investing a significant amount of their money, and accordingly, money feels tight. This is the financially sound way to avoid lifestyle creep, but it doesn't mean you're in a precarious position. Or alternatively, they're paying for really expensive, but optional things like private schooling and expensive cars or vacations.
Obviously some people are struggling, but this paycheck-to-paycheck stat is not an accurate way to quantify that. It's best IMO to look at objective metrics like the poverty rate, or people's objective financial picture (available via surveys.)
I don't think that's the common understanding of what "living paycheck to paycheck" means.
It's usually just the inverse of saying most people don't have ready cash savings laying around; because there's no need to when you have credit every which way all the time.
Much better to look at the debt load on people and how that changes over time. Someone who makes $5k a month and spends $3k on debt service and lives off $2k is going to feel much different from someone who makes the same $5k, lives on $2k, and spends $3k on candles or whatever (since they can stop buying candles anytime but you can't easily stop paying down debt).
Clearly you're not in that situation, and likely have never been anywhere near it with that privileged view of the world.
Many people in the States are living on the edge; i.e. paycheck to paycheck, not, "oh, well, I'll just dip into my equities if the need arises".
This is quite a precarious situation to me. People should not need nor be encouraged to rely on debt to live life, especially month to month.
The default mode should be working people make enough to, if budgeted moderately well, can pay for everything plus save money away post tax[0]
Anything less and you’re only growing systemic issues over time
[0]: including tax exempt savings like 401Ks is ill-reflective of people’s ability to save money aside for emergencies and unexpected costs
How can you be "paycheck to paycheck" if you have a massive savings pile? Are you dumping it all into 25 year treasuries?
How I got here is living way below my means in my twenties, saving up tons of money, and nowadays living at my means while still maxing retirement. I also have almost all that saved money invested, which just grows the pot as it sits. I also have zero debt besides a 3% mortgage.
So basically I spend all of every paycheck, after retirement has been deducted, but if I lost my job I could maintain my current life with zero income for a few years before running dry.
At which point, it actually kind of makes sense to blow your entire income on lifestyle.
An aside, if you’re spending 100% of your income on just lifestyle stuff… you don’t to work at all if your retirement covers it.
Well then now we know that the media will happily use unreasonable definitions to bolster stats for click bait stories and headlines.
People assume paycheck to paycheck means "Spending each paycheck entirely on absolute necessities to live" but the survey definition is "Do you save any money from your take home pay every pay period".
This is how you get people at every income level reporting they live paycheck to paycheck.
Necessary spending is food, utilities, clothes, rent. But not eating out, fancy housing is a nice neighborhood, designer clothes, etc.
"After long term saving and paying for my indulgent lifestyle, I just don't have anything left at the end of the month!"
Somewhat offtopic, but I call these articles "parading the idiot". Where a newspaper or other media outlet runs an article interviewing a person where the subject is clearly out of step with everyone else in their assumptions.
See also articles where a property investor complains about how hard they are doing financially because they have to sell one of their eighteen investment properties.
I don’t understand. Isn’t everybody living paycheck-to-paycheck then?
How?..
These are not people I know, but some of what's in this article "rhymes with" things I see high-income, high-spending associates doing: https://www.cnbc.com/2018/03/06/budget-breakdown-of-a-couple...
From that article: "As Dogen puts it, they’re effectively “scraping by,” in part because they’re still living “paycheck-to-paycheck,” despite their generous salaries."
That's right: they're each making $250K/yr, and living paycheck-to-paycheck as they describe it.
Housing being too expensive is not a company problem for example.