71% of Americans Are in a Money Trap: How To Get Out Now
According to a recent report from U.S. News & World Report, 71% of Americans surveyed feel like they are living paycheck to paycheck.
That is not a small percentage — it is a startling one.
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If you're among the majority of Americans caught in this cycle, here are a few ways to improve your situation:
Make a Budget
According to Ben Waterman, co-founder and CEO at Strabo, most people have no idea where their money goes. This is why he recommends making a budget so you can see exactly what you have coming in and going out.
The first step in creating a budget involves tracking expenses — something that not only puts you in control of your finances but also helps you identify and eliminate financial leaks. Most people can find between $200 and $500 per month in unnecessary spending. Reallocating that money can help break the cycle of living paycheck to paycheck.
Increase Income Strategically
“Sounds simple, but one of the most straightforward ways to save more is to earn more,” Waterman said.
That’s why he advises increasing income strategically: Take overtime, negotiate a raise, look for a better-paying job or start a side hustle using your existing skills. Ideas include tutoring, freelance writing, pet sitting, car detailing, IT consulting and party planning.
Switch to Store Brands
Many people buy name-brand items at the grocery store because of perceived quality or brand loyalty. But most store-brand items contain the same ingredients as their name-brand counterparts.
According to Austin Kilgore, an analyst with the Achieve Center for Consumer Insights, simply switching to store brands can save you 25% to 50% on daily essentials.
“That means a family that spends $400 a month on name-brand groceries could potentially save up to $200 every month,” Kilgore said. And when you're in a pinch, every little bit counts.
Lower Your Standard of Living
For those with above-average incomes, Michael Sullivan, a personal finance consultant at Take Charge America, recommends lowering your standard of living.
In other words, avoid lifestyle creep by not spending everything you make in an effort to keep up with the Joneses. Consider a less expensive home or car, and stay away from pricey clothes and restaurants. There’s no reason someone earning $200,000 a year should be living paycheck to paycheck, so start thinking function over form.
Extra income should go toward savings, investments and debt repayment — not bigger and bigger bills.
Cook at Home
It can often feel easier to order takeout rather than cook at home, but you'd be shocked by how much money you can save by simply chopping your own vegetables and turning on the stove. Hannah Stewart, host of the YouTube channel My Family Recipes, stated that when her family eliminated ordering takeout meals three times per week, they saved a startling $10,000 per year! For those unable to fully cut the cord, eliminating takeout just one night per week can save roughly $3,300 per year.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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