nearly 24% of all households are classified as living paycheck to paycheck this year…That share is slightly higher than last year…
nearly 24% of all households are classified as living paycheck to paycheck this year…That share is slightly higher than last year…
If you never exhausted your supply of money (as you say you not only had savings, and were even adding to it with unspent money from each paycheck), I’m confused what exactly is “paycheck to paycheck” about your situation then? Is it simply that you receive a paycheck and then at the next pay interval you receive another paycheck? What is your definition?
But I would exhaust the money from my paycheck that was in my checking account, and I had many times where I would also empty my savings when I’d get hit with an unexpected expense.
My point was that even though I was saving money, it wasn’t ever money that I ever saw in my bank account. My 401k was taken from my paycheck and I couldn’t even think about touching that with a lot of effort and expense. I had my direct deposit setup to send most of my check to my checking account, but I always had a small amount going to my savings at a different credit union. My toughest years I was making around $25k a year and I had 5% of my income going to my 401k and 5% going to my savings. My rent, car payment and car insurance would be the first things I paid each month and usually that meant my first 2 weeks of the month were sparse and if I had stopped putting aside that 10% it would have been a little help, but not enough to get through to my next check. So yes, I had access to money, but I was still living paycheck to paycheck because I had strict rules on when I could access that money - and I tried to pay back to my savings anything I took out, when possible.
Would you consider someone adding to their 401k each check to not be living paycheck to paycheck?
No.
Here is the key difference. You are not spending your additional funds because of choices you’ve made to save. Folks living paycheck to paycheck don’t have additional funds to save. All of the paycheck is spent inside of that pay period. At any time you could have chosen to spend your saved money, but you chose not to. What you’re doing what most would call “budgeting” and your choice to not spend your savings are “sticking to your budget”. If you had a dire emergency such as being injured or ill for long enough to miss a paycheck would you have tapped your savings to stay afloat and pay your expenses even though it would have broken your budget? I think most would say “yes”. I know I would. This is the difference. Those living paycheck to paycheck aren’t able to put aside money to create an ever growing savings, as you did.
I very much commend you on your savings and budgeting! You’re on great financial footing with your circumstances and your choices. Nicely done!
During the time I was getting paid around $25k a year I was bringing home around $700 a paycheck (every 2 weeks). Me putting aside 10% between my 401k and my savings meant that I had around $30 every 2 weeks going into savings. I often ran out of available money several days before my next check, and having an additional $30 would have been nice, but would have likely only given me another few days.
And yes, when I had unexpected bills, and later when I lost my job, I did dip into my savings because that’s why I had it, but that 10% want going to be the difference between me living paycheck to paycheck, or not. In fact, the transition to not living that way was a very gradual process.
I’m not sure I understand your logic. If you dipped into your savings, then you clearly thought it was needed in those extreme times and it made a material difference. If it wouldn’t have made a difference, then why did you even dip into your savings?