Dangers of Living Paycheck To Paycheck
|October 2, 2009||Posted by Roshawn Watson under Uncategorized||
Is there not enough check at the end of your month? Apparently, you’re not alone.
Careerbuilder.com hired Harris Interactive to conduct an online survey amongst US workers 18 and older to determine our financial solvency. The results reveal a disturbing trend: 61 percent of workers reported that they usually live paycheck to paycheck just to make ends meet. This marks what appears to be a significant rise over last year’s 49% and 2007’s 43%. Notably, the trends held true for those with incomes higher than $100,000 as well. Thirty percent of workers with salaries of $100,000 or more report that they live paycheck to paycheck, up from 21% in 2008.
Savings and Investments Suffer Too
The effects of the recession can be felt in the households’ bottom lines, and many have resorted to dipping into savings as a means of coping with dwindling incomes, often precipitated by job losses and salary declines. Although the survey did not ask what percentage of respondents dipped into existing savings and investments, the survey did reveal that twenty one percent of workers say that they have reduced their 401 (k) investing or personal savings just to make it. Twenty three percent of respondents with salaries at least $100,000 annually also reported to have decreased 401 (k) contributions, which likely indicates that those with higher salaries (i.e. salary over $100K) were not financially insulated from the troubled economy or that they feared investing in such a volatile market. Additionally, many reported difficulty saving anything at all. Thirty-six percent of respondents said that they were not contributing to any retirement accounts at all, which is up from 31% in 2008. One-third (33%) of respondents don’t save anything from month to month, up from 25% in 2008. Thirty percent of respondents save between $51-$100 monthly while 16% save $50 or less monthly, meaning that nearly half of those who do manage to save are not putting away much.
The practice of dipping into savings is essentially robbing Peter to save Paul, and when it’s your savings, you are Peter!
Although it is reasonable to be scared, the knee-jerk reaction to suspend (or
diminish) investments while the Dow is plummeting is the very reason why some
investors missed the whopping 45.7% upswing we have experienced since March.
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Copyright 2012, Roshawn Watson, Pharm.D., Ph.D. All Rights Reserved.