3017: The 10 Reasons Why You’re Living Paycheck To Paycheck by Christina Browning of Our Rich Journey

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[00:00:51] This is Optimal Finance Daily, The 10 Reasons Why You're Living Paycheck To Paycheck by Christina Browning of OurRichJourney.com.

[00:01:00] Amon and I once read a statistic that shocked the both of us. In America, roughly one in four families that earn over $150,000 a year are living paycheck to paycheck. You might be thinking, how is that possible? We asked ourselves the same thing. $150,000 should be more than enough for a family to live on per year. But you might also be one of those families. And you might be wondering why you're in such a confounding situation.

[00:01:29] Well, today, I'm going to tell you why many of those people are living paycheck to paycheck. And hopefully, you give yourself something to think about if you're in this situation yourself. Number one, you don't know where your money's going. It's kind of common for people who earn a lot of money to not pay attention to how they're spending it. This is a pretty basic one and can easily be solved by making a budget and tracking your expenses.

[00:01:54] Number two, keeping up with the Joneses. If you don't know this saying, it all comes down to one thing, class. People want to show the world that they belong to a certain class. And doing that involves spending their money on expensive, materialistic things. Whether it's a car, a watch, a piece of jewelry, whatever it is. It's draining your bank account. And often, the only reason to do this is to flex on others and keep up appearances, which is nowhere near as important as having assets and financial stability.

[00:02:24] This kind of mindset is always toxic to financial growth. Number three, too many gadgets. I get it. It's tempting to want the newest iPhone or whatever technological toy catches your fancy. But more often than not, that fancy espresso machine is taking a significant chunk out of your paycheck. Do you really need that thousand dollar juicer that you probably only use for the first few months before stuffing it in the back of your kitchen cabinet?

[00:02:53] Number four, food. Eating out four times a week isn't helping you. From fast food to expensive restaurants, anytime you're going out for food and drinks, you're spending more money than you think. By making your own food, you could be saving hundreds of dollars a week. Learning to cook is one of the best financial hacks you can incorporate into your everyday life. Number five, clothing and fashion. Ah, clothes. The silent killer.

[00:03:20] The problem with clothing is that shopping for it can sometimes be more of a pastime than a necessity. If you're the kind of person who has so many clothes that you have to rotate them through the seasons and put half of your wardrobe in storage while you wait for hot or cold weather, you have too many clothes. Number six, cars. Do you have more cars in your household than people? Then just like clothes, you have too many cars and you're spending too much money on them.

[00:03:48] Do me a favor and take a look at your retirement account. Have you spent more money on cars in the last two decades than you've put into your retirement account? If the answer is yes, consider selling the cars you drive the least. And what's more, consider buying used cars in the future. It'll save you a ton in the long run. Number seven, your house. Most Americans feel like they need homes that are bigger and better than what they can realistically afford.

[00:04:14] And what's worse is that most of them don't fully utilize the space that they already have. Having a mortgage on a home that is bigger than you need not only eats away at that paycheck, but the annual repairs and maintenance costs on an enormous home do too. Number eight, spending money on your children. Now this might set off alarm bells in your head, but keep listening. We have two daughters of our own and sometimes struggle with this one too. We're often spending money on them.

[00:04:42] This is normal for most parents, but some parents take this a bit too far. Often material things are the quickest way to keep your kids happy. So buying new toys and gadgets is the first port of call to keeping your little kiddos happy. Think twice before you do this. As the old adage goes, money cannot buy happiness. Another issue is spending for prestige, such as shelling out thousands of dollars to keep

[00:05:08] your kids in certain clubs or to send them to prestigious events because that's what their peers are doing. These are the kinds of things you should keep an eye on and limit, limit, limit. Number nine, toys. I'm not talking about your children's toys. I'm talking about yours, boats, RVs, timeshares, all of those things you spend huge portions of your salary on because you think you need them. But the initial cost for these things plus the cost of upkeep can be astronomical.

[00:05:37] Number 10, financing your vacations. Vacations can cost big money, not just for the initial cost of the vacation, but if you're using credit cards to finance your vacations, you're also likely to accrue a ton of debt. In some cases, the interest from your debt can end up costing more than the actual vacation itself. My recommendation to you, budget for your vacation. Plan your vacations out ahead of time. Save for your vacations and don't go into debt over a vacation.

[00:06:06] There you have it. Some of the top reasons you or someone you know is living paycheck to paycheck without putting any money away for savings. This should be an eye-opener as to how you're using your money and what you might need to cut out so you can bulk up your bank account. You may also want to try more proactive ways of boosting your income and making up for past losses. This could include picking up a side hustle, working extra hours, or asking for a raise. Whatever you choose to do, it's important to get your finances in check.

[00:06:35] Even if you're not living from paycheck to paycheck, this should be an eye-opener for anyone regardless of your financial situation. But either way, I hope this has given you more insight on how to save more money and how to work towards your financial growth and financial independence. You just listened to the post titled, The 10 Reasons Why You're Living Paycheck to Paycheck by Christina Browning of OurRichJourney.com.

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[00:08:02] That's rocketmoney.com slash OFD. Rocketmoney.com slash OFD. I found for myself that spending less in these areas required a big mindset shift. When I realized that I could use my money to buy complete autonomy over my time, it made it easier to not spend in the areas listed in this article. I also needed to prove to myself through a lot of experimentation that I could find satisfaction

[00:08:31] in the creativity that is required to reduce spending. Consumerism is ingrained in our culture, and we've been conditioned since birth to participate in the work-to-consume cycle. It takes a lot of awareness to push back against this. I saw this statement in a personal finance Facebook group the other day that really struck me. It said, quote, The 8-hour workday is too profitable for big business, not because of the amount of work

[00:09:00] that people get done in 8 hours, but because it makes for such a purchase-happy public. Keeping free time scarce means people pay a lot more for convenience, gratification, and other relief they can buy. It keeps them watching TV and its commercials. It keeps them unambitious outside of work. We've been led into a culture that leaves us tired, hungry for indulgence, willing to

[00:09:26] pay a lot for convenience and entertainment, and most importantly, vaguely dissatisfied with our lives so that we continue wanting things we don't have. We buy so much because it always seems like something is missing, end quote. I liked this statement because it captures why I feel it's so important to have full autonomy over my time. I'm much less likely to fall into the consumerist trap.

[00:09:54] And that's another episode of Optimal Finance Daily. Thank you for your support and for listening every day, of course. We wouldn't be here if not for our fantastic listeners and contributing authors. And I'll be back with another post for you tomorrow, right here, where your optimal life awaits.