Why Living Paycheck to Paycheck is a Good Thing
You’ve heard the story – living paycheck-to-paycheck is bad thing that only prevents you from getting ahead. I beg to differ; paycheck-to-paycheck living in many ways, is a good thing that can encourage proper budgeting, saving and conservative spending. Let’s be realistic, the majority of us do anticipate and need our next paycheck to make ends meet. Thus, giving advice that is impractical and totally infeasible only discourages people from making smart financial decisions, let’s embrace this norm of living and discuss why it actually can improve our finances.
The main reason we create budgets is to ensure we don’t spend more than we make. Budgets help us put our finances in perspective and give us realistic outlooks on what we can and cannot afford. The paycheck-to-paycheck way of living, makes the budgeting process even more important because the money we receive must be spent wisely, so that all our needs are met. Often it’s true, that when people make less, they spend more time deciding how to spend their money. Budgets also allow us to put aside a strict amount for saving purposes. So, even though we rely on our next paycheck, we are accumulating a savings by treating our savings like a utility bill. In a sense, we live paycheck-to-paycheck in order to pay ourselves. This is OK, so don’t get discouraged, with proper budgeting you will get ahead. Nevertheless, even when we feel like we are ahead, we still need that next paycheck to make sure we stay on path towards our long-term financial goals.
Let’s look at an example. Say your income more than exceeds your monthly bills and expenses. You put enough money away to convince yourself that you are saving and you also participate in your employer’s retirement plan. However, because this type of person does not “need” the next paycheck to get by, he or she is more inclined to purchase, purchase, purchase. Spending habits like these often lead to insufficient savings and retirement planning. This person lives paycheck-to-paycheck not to pay his bills or himself, but to spend.
Living paycheck-to-paycheck keeps us in check. $
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