40% of Americans Live Paycheck to Paycheck

by Sam Burgoon on October 9, 2012

If you frequently have to borrow money from family or friends, take out cash advances, and rack up credit bills to make ends meets, you are not alone. A survey done by CareerBuilder.com reports that 40% of workers live paycheck to paycheck, as its shown on the following infographic based on the results from the survey.

40% of Americans Live Paycheck to Paycheck

Issues from Living on a Paycheck to Paycheck Basis

Living paycheck to paycheck leaves you susceptible to financial emergencies. In addition, you can easily accumulate bills if you constantly need to borrow money, creating a never-ending cycle of debt. By getting more debt, you increase your reliance on your next paycheck to pay for more expenses. This way, you may easily run out of money, as more money needs to be borrowed on a monthly basis to stay on top of financial obligations.

How to Stop the Paycheck to Paycheck Cycle

Many people live paycheck to paycheck because their incomes are not enough to cover their expenses since a proper budget is not followed. However, you may get out of your paycheck to paycheck dependency by following our three tips to improve your finances.

1. Make a Budget. Budgets itemize expenses to know where the money is going. You can make a budget to follow on a monthly basis and test if your income is enough to cover your basic needs. If you are able to manage your expenses based on your income, avoid buying things not listed on your budget.

2. Track your expenses. If you have a hard time following your budget, you should track all purchases and payments to know exactly where you spend your money. Make lists for purchases like food, utilities, and loan bills. Add receipts to each category to calculate true costs too. By doing this, you’ll be able to see how your money is spent and maybe even find savings opportunities.

3. Reduce your spending habits. Learning where your money is going helps determine where you can start saving. You may have to change your lifestyle if you want to save more though. For example, if you usually buy a $6 latte every evening after work, that’s a total of  $120 extra monthly expenses. Consider making your own coffee or even giving up drinking coffee altogether for added savings. Check for other ways to save money like cutting your cable bill or gym subscription until your finances are back on track.

Stop struggling with your finances by properly managing your income and expenses. Since your entire financial future depends on the monetary decisions that you currently make, start by freeing yourself from your paycheck dependency.


Sam Burgoon is a social media marketing executive for several personal finance websites. He has a degree in business administration and marketing and has previously worked for companies like Bank of America and Oracle.