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Inflation Has Affected 63% of Americans’ Lives: How Not to Live Paycheck to Paycheck

Written By: Eric Williams
Reviewed by: Mike Reyes
Last Updated June 14, 2023
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Rising prices make more and more American households feel stretched too thin. The number of consumers living paycheck to paycheck was 63% as of November 2022, while this number hit a historic high of 64% in March. 

The daily spending of Americans keeps on outpacing their income, so thousands of people feel strapped for cash, which affects their ability to plan and save. Here is how to stop living paycheck to paycheck and improve your finances.

The Current Situation with Inflation

Various surveys found that even high-income earners and those who make more than six figures are under pressure these days. About 47% of people claim to live paycheck to paycheck compared to 43% in January 2023. 

As of April 2023, the inflation rate in the United States has reached 4.9%, making it an issue for small business owners, with 41% identifying it as a primary concern in keeping their businesses afloat. And this is not just happening in the US; 90% of the chief economists expect high or very high inflation in 2023 in Europe.

Of course, feeling pressed for funds prevents people from planning, achieving their aims, and saving for the future. The U.S. Bureau of Labor Statistics mentions that the average hourly income of American employees is down 1.9% from the previous year.

Inflation is the common reason for a wage decline. As a result, rising prices and high inflation make consumers rely on crediting options, along with a list of apps offering immediate cash or use their savings. Credit card rates are also rising, so building a savings fund to prevent sky-high interest rates and debt is essential.

How to Get Back on Track with Your Finances

What if you stopped setting aside funds? Is there a chance to get back on track in terms of personal finances? Yes, it’s not all lost, and here are the top tips to help you take control of your finances and make the necessary adjustments to overcome difficulties.

Consider Mistakes as Life Experience

We all make mistakes. Your aim is to learn from them. Whatever financial errors you’ve made in the past, you can reflect on them and consider them as a valuable learning experience. 

What could you have changed? Use your thoughts to make adjustments to your personal finances or lifestyle in general. You may decide to stop taking out payday loans as they only lead you to the endless debt cycle. You may change your financial habits and start saving more.

Check Your Budget

Sometimes, a widespread mistake is to create the wrong budget. It may be wrong, even if it worked out for your friends and even if you used a budget template. Take your credit card and bank statements to define whether you are spending too much and what spending categories should be altered. When you take an unbiased look at your finances and spending, you will understand what you need to change in order to save more.

Have a Schedule and Stick to It

You won’t be able to change your financial habits for the better if you don’t have a schedule. Create a schedule for paying your monthly bills, checking your budget, and making regular contributions to your investment and savings funds. When you have a particular schedule and stick to it, it will be easier for you to remain on track and boost your financial stability.

Concentrate on Things You Can Control

As you may already know, we can’t control everything. Hence, inflation is rising, and prices are increasing too. Moreover, we can’t control falling ill or becoming unemployed. You can focus on things you can actually control instead. 

For instance, you have control of the sum you set aside in your savings account on a monthly basis. Besides, you can control the amount you have in your retirement fund. Remember that it’s essential to contribute to your retirement fund while you are still young and employed so that you save enough for your golden years.

Make a Realistic Plan

You may want to get back on track with your finances as soon as possible, but it’s essential to be realistic. Make a certain plan that will be written down on paper to show you what steps need to be taken to achieve financial success. 

What do you need to turn your dreams into reality? Think of your present situation and what you want to accomplish. Create a realistic plan to improve your financial stability and strive for monetary independence so that you stop living paycheck to paycheck.

The Paycheck to Paycheck Report Data

The recent reality check published in The Paycheck to Paycheck Report mentions that the share of consumers living paycheck to paycheck has fluctuated during the previous year. In November 2022, it sat at 63%. A growing number of high earners claim to be living paycheck to paycheck, and consumers of all income levels feel the strain of inflation more and more.

Source: https://www.pymnts.com/wp-content/uploads/2022/12/PYMNTS-New-Reality-Check-December-2022.pdf 

Inflation has a great impact on consumers’ financial goals. This pressure keeps on weighing on individuals as they try to set their near-term and long-term monetary goals. The data from the same research revealed that 50% of respondents and 43% of those not living paycheck to paycheck claim high inflation had lowered their ability to accomplish their long-term monetary aims.

This share rises to 57% among all paycheck-to-paycheck respondents. About 64% of people who report that higher inflation affected their ability to achieve their long-term financial targets also have difficulties with bill payments, while 54% of these respondents don’t.

The Problem with Credit Card Debt

Apart from living paycheck to paycheck and other financial issues, American consumers are also experiencing problems with credit card debt now. More than eight in ten people who have credit card debt feel stressed and worried about it. 

What is your credit card debt? About 15% of Americans have a debt of $10,000 and more, while 31% of them have about $6,000 of credit card debt. People saw a significant increase in their debt in 2022. Two main reasons for rising credit card debt are living paycheck to paycheck and rising expenses.

The Bottom Line

More and more Americans are feeling strapped for funds. While you can’t control the economic recession or rising inflation rates, you can control your own spending and prioritize your financial aims. Follow our tips to get back on track with your finances and overcome temporary issues.

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