I have read somewhere that only less then 1/3 of families have a written budget. I have never understood how a family can survive with out a budget. It should be stressed more that families should have a budget.
As a country we live with if we want it then we need it and should get it. Just borrow the money. This is promoted by the government, by colleges, business, and banks.
Just last week I was at a store inquiring about getting a back up camera for my pickup. It was going to require me replacing the radio with one with blue tooth. Adding about $250 and insulation about another $100. Total cost was between $500 and $600. I told the sales man that that was too much money I could not afford it. He was like I could get a credit card and spread out the expense. He could not grasp the idea that it was still going to cost me over $500. He only got the idea after I asked him, “you mean if I get the credit card I will only have to pay back $200 not $500+?” Then he was no it does not work that way, you would have to pay the full amount. Then I asked then buying by credit won’t save me any money? and he agreed. Then I told him that I could not afford the $500 plus no mater how you arrange it. The Idea of paying in full for something I did not need was foreign to him.
If your income’s precarious and variable, you probably can’t write a proper budget. Sure, if you have a stable job and you can approximate your weekly or monthly earnings and outgoings it’s a sensible thing to do. If, on the other hand, your income is like mine when I was on a 0 hours contract, when my hours varied between extremes of 4 to 60+ per week depending on company contracts (of which I could get as little as a few hours notice), any attempt to work out a sensible budget wouldn’t be worth the paper it was written on.
The best that was possible was to pay what needed paying as soon as it was possible, and try to put aside as much as I could during the good times, then try to eke that out and find side jobs when the contracts weren’t biting.
Plus if you’re on a marginal income, something as small as a car breakdown could eat up several months or even years worth of careful scrimping at any time. You live with that for a few years, and it’s very easy to start simply not caring about spending too much, especially if you have kids, who are not going to happily wait a few years for the toy or trip or clothing they desperately want (and you probably feel pretty guilty about them missing out on so much childhood joy). Financial crisis becomes so familiar it’s just not scary any more. Adding a little to the debt for something nice for once can easily feel unimportant- especially if it’s not as though not spending it would leave you debt free or able to save for something better.
It’s very easy to look at people and think ‘Huh, buying a huge new TV when they’re already in debt? No wonder they’re so poor!’, but their reality may be that they’d not only have to not buy a new TV to be not in debt, they’d have to cut the food budget down until it’s rice and beans for every meal, turn the heating off altogether, sell the car and walk miles to work in all weathers, buy all their clothes second hand and keep them til they’re falling apart, get rid of the dog, never see friends and family unless they’re close enough to walk to, and carry on like that indefinitely, because now they’re ‘not in debt’, but they still have no surplus, so they’ll never be able to save their way out.
Even 30% is pushing it, it would be around 25%, FICA, federal, state, here in NJ which is not a low tax state, no itemized deductions. Likewise I live right next to NY, very expensive area, and you can room with people in a decent apartment for ~$1k/mo. Expensive compared to what you’d get in a low cost area? Sure, also a little less expensive than Manhattan. But nobody says you have to live in Manhattan rather than here (Hudson Cty NJ) or relatively cheaper areas of Brooklyn, Queens etc even if you work in Manhattan. You could sock away $20k/yr, plus the 10% student loan pmt, on $82k as a single person even in the inner NY area, if you were really laser focused on saving. And you could have reasonable savings even if a little less laser focused. If OTOH you try to ‘live the NY dream’ on $82k single, then yeah you’ll go broke.
Living paycheck to paycheck at $82k single is a spending problem. Which it is for most ‘paycheck to paycheck’ people in the US. For some people it’s hard to get by at what our society considers a minimal level, especially the minimum people want to provide their kids if they have them. But not for $82k/yr single people.
The government shutdown for over two weeks five years ago. I can’t recall anyone complaining that it was due to the affluence or apathy of the Obamas. The people running the government are doing a shitty job. They have been for quite some time, and they seem to only be getting worse. But I don’t see how it is at all related to the fact that the current president is known for his wealth.
Here’s how- you have a rough idea of how much your expenses are, your income is high enough to cover your expenses and still save and your tastes/restraint are such that you don’t impulse spend more than you can afford to. Not everyone needs a written budget and not everyone needs the sort of strict budget where they spend $82 a month on groceries and put back the coffee if that brings the total to $85. There’s a big difference between trying to support a family of 5 on $40K and a couple living on $200K. Especially if the $200K couple’s tendency is to drive a car into the ground.
Every situation is different, of course. But people trying to give good personal financial advice have to generalize. There’s room to criticize various personal financial pundits, but IMO it’s basically not reasonable as somebody above to call personal financial advice on savings useless because some people’s incomes are so low, and/or insecure and variable, that there’s little they can do to save.
This thread is headed by an all over the place OP. It focuses on Trump which just derails any conversation about larger issues. Who is president at a given moment is not the root of the US household savings problem. Also the ‘govt shutdown’ is a particular case where a very small % of the US workforce accustomed to especially secure income doesn’t get paid on time. That’s not the national ‘paycheck to paycheck’ problem either. Then the OP cites an $82k/yr single person living ‘paycheck to paycheck’, which is obviously a spending problem.
Other people interpret ‘paycheck to paycheck’ as a discussion of poor people. But it isn’t necessarily. It’s people of a variety of incomes. Like you say and obviously, ‘paycheck to paycheck’ is a different thing between 5 people on $40k (or how about less) v couple on $200k or single person at $82k, but people in all those situations are living ‘p to p’. A large number of Americans live ‘paycheck to paycheck’ because they aren’t good at managing money, and thinking through and aligning their actual income to the lifestyle they want to live. I take it as given that personal financial writers are talking to them, and are not telling actually poor people they need to save a high % of their income.
Absolutely- but I was responding to a post where someone said they couldn’t understand how a family could survive without a budget ( which presumably includes families who are not living paycheck to paycheck). I was absolutely not saying that reccommending a budget is useless advice to give to someone living paycheck to paycheck.
I was careful with my choice of words. There’s a reason I said “known for his wealth” rather than “wealthy”.
But, I also see the irony that the same people who are quick to point that Trump isn’t really wealthy, are the same people who would argue that the Trumps don’t care about middle class or know what it’s like to live paycheck-to-paycheck because they’re so wealthy. One can’t have it both ways. Is he so rich that he is incapable of understanding the financial burdens faced by average Americans? Or is he a big phony who is millions of dollars in debt?
That’s an entirely different thread. This one is about government shutdowns, and whether or not the financial status of the sitting president may be a factor and/or cause. My argument is that the president’s wealth (or lack thereof) plays no part in the government shut down. We’ve had these under Obama and Clinton, neither of whom was known for his wealth like Mr. Trump. The President’s wealth is quite irrelevant with respect to our government shutting down.
People who judge those living paycheck-to-paycheck need to remember you are judging a person based on a singular snapshot in time. A single emergency can turn a person with a decent amount of savings into a person who lives paycheck-to-paycheck.
Let’s say someone lives the most frugal lifestyle possible. Their wages permit them $150 in disposable income a month, and they save every penny of that. Miraculously, they manage to have a year with no emergencies, leaving them with $1800 in their savings account by the end of the year.
But within the first week the following year, their car’s transmission goes out.
Or they fall down the stairs and break their leg, racking up a major hospital bill and weeks off from work.
Suddenly their savings are gone and now they are back to living paycheck-to-paycheck. It will take them some time before they can replenish their emergency buffer.
Thats a good article. Rather than blaming the last 40 years of wage stagnation and war on unions, people just blame the poor for buying a $2 coffee.
Most early retirement advice follows a similar formula. Earn 100k+ a year and live like a college student for a decade or so. Its all based on the concept that you have a ton of money but are just spending too much.
I’ve lived paycheck to paycheck. It’s a bitch. You’re one minor disaster away (like a major car repair) from being behind the eight ball for a year as you repay a loan that you really didn’t want to take out. You have to decide which bills are going to be paid on time and what will have to wait. Been there, done that. What doesn’t help these people are tax cuts for the wealthy or deregulation or outsourcing. Trouble is, too many of them are tricked into voting for the party that wants to cut their safety net and let the so-called job creators get even fatter.
This sounds off. I know there are plenty of people living paycheck-to-paycheck, but very few of them would have a salary as good as your son’s with no children.
As discussed in layaway thread, I know people who cash their paycheck at Walmart* (I’ve been told they sometimes will cash checks before the actual paydate, especially if they know you) and keep all the cash in their wallet and paying all their bills, including utilities in cash, in person. When all the money in their wallet is gone, they just wait for the next payday.
*I’ve done payroll in the past and in some companies we had to institute a strict paycheck issuance time (e.g. Friday at 2pm) to ensure we had enough money in the bank to cover the payroll. Some people would immediately take time off to go to Walmart to cash their check and pay their utilities.
Again, this has nothing to do with whomever is in the Presidential office at the time. It’s just a way of life they’ve always lived and will always do.
As for “Everything you need to know is on the internet.” As I stated above, that’s making a big assumption that everyone wants to know and create a budget. Some people just don’t think that way. Also, not everyone is literate enough to be able to read and understand what creating a budget entails. I know (usually older) white collar managers who have no clue how to use Excel, much less ever used or created a hand written ledger.