It’s not so uncommon for Americans to live paycheck to paycheck — meaning, to not have savings to fall back on between pay periods. But a new survey conducted by Talker Research on behalf of EarnIn found that the average American has already mentally spent more than half of their paycheck before it lands in their bank account.
The survey polled 2,000 employed Americans who make less than $75,000 per year and found that the typical American spends about 43% of their paycheck within the first three days after receiving it, in addition to the roughly 51% that’s pre-spent mentally.
Overdue bills are a big driver of this trend — this resonated with 38% of respondents. But large bills, like rent or mortgage payments, necessities like food and medication, and smaller utility bills are likely to be among the first expenses paid after receiving a paycheck.
Of course, that approach makes sense, since essential bills should be covered first. The problem, though, is that only 20% of Americans don’t run out of money or otherwise have to live on a tight budget in the days leading up to their next check. Worse yet, 56% of respondents said that less than 10% of their pay goes into savings.
If you’re not saving as much as you should or managing your paychecks as well as you feel you could be, it may be time for some changes. Here are a few to consider.
A recent survey found that 74% of Americans have a monthly budget. That’s good news. But, of those with a monthly budget, 84% tend to exceed it. That’s not so good.
This is why it’s not enough to just have a budget. Rather, you need a realistic budget. If your budget leaves you relying on credit or with zero room to spend money on leisure and activities, it’s probably not working and you need to assess if you’re living within your means.
To guide you, consider the 50/30/20 budget rule, which recommends that no more than 50% of your pay goes to needs (like housing, utilities, taxes), 30% goes to wants, and 20% goes to your savings. Another rule is the 30% rule and that suggests that no more than 30% of your gross income should go to housing expenses such as rent or mortgage payments, utilities, taxes, and insurance (though some experts suggest that 40% is more realistic these days).
