• Pay Check to Pay Check to Pay Check to Pay Check

    Do you have any idea of what living paycheck to paycheck means? According to a national study conducted online by Harris Poll in 2017 on behalf of CareerBuilder that surveyed 2,369 full time employers along with 3,462 full-time employees ages 18 and over showed that 78% of the workers surveyed are living paycheck to paycheck. That's 8/10 people in the survey!!!  That's CRAZY!  Somehow we have developed the idea that people who are low income earners are typically the ones living payday to payday but what if I told you the amount of money someone makes doesn't have much to do with it... in fact according to the study about 1 out of 10 workers who make a $100,000 or more live paycheck to paycheck.  $100K!!!! So, would I be accurate in saying how much you make is less important than how you handle what you make??? I'd say yes, don't believe me, here is a quick pseudo example of budgets from Jack & Jill:



    Jack
    Income: $6,181 per month after taxes (which is a gross annual salary of about $100,000 see salary calculator)

    Tithing: $600.00
    Saving: $0.00 
    Home Mortgage:  $2,300 per month (is about 28% of gross salary)
    Utilities (water, trash, electricity etc.): $300.00
    Car payment: $515 (approximate average new car payment in 2018 according to Experian)
    Boat Payment: $500
    Groceries: $720 (higher income earns spend about $180.00 per week on food according to Gallup in 2012)
    Clothes: $400.00
    Entertainment: $900

    Total Expenses: $6,235

    Jack's monthly cash flow (Income - Expense) = -$54.00 per month

    Jill
    Income: $2,746 per month after taxes (which is a gross annual salary of about $40,000 see salary calculator)

    Tithing: $275.00
    Saving: $411.90
    Home Mortgage: $933.00 per month (is about 28% of gross salary)
    Utilities (water, trash, electricity etc.): $300.00
    Car payment: $0.00 (bought used car for cash)
    Boat Payment: $0.00 
    Groceries: $300
    Clothes: $50.00
    Entertainment: $400
    Total Expenses: $2,669.90

    Jill's monthly cash flow (Income - Expense) = $76.10 per month
    In no way, shape, form, or fashion is this an ideal budget or the correct way to create a budget (maybe we'll save that for another blog post) but I hope it makes the point that the amount of income doesn't necessarily gauge "broke-ness". Rather you realize it or not in this example Jack is broke!!! Not because of the amount of money he makes but because of his decision making with the money he has.  Let's say in a year his budget stayed like this each month, he'd end up in the hole $648.00 ($54 times 12 months). How would he pay for that? A credit card? A personal loan? Both with ridiculous interest rates! It would be harder and harder for him to become cash positive if he doesn't change his money habits; thus the cycle of "broke-ness" continues.  

    Although Jill makes $60K less than Jack, she is on a road leading to financial emancipation because she is saving and not consuming all of her money. In a year she would have $913.20 if her budget stayed the same. Now image if Jill made as much as Jack and kept her same money habits; she could start asking questions like what should I do with the extra money? If I save more can I retire early? How can these extra dollars help me with my goals? In reality, broke is broke no matter how much you make, so don't live your life broke! I know it's hard to pass up the newest "this" or the most expensive "that" at times but do these things make up who you are?  That's my challenge to you... get the highest income you can while enjoying what you do (see Work!!!) but the key is to learn how to manage your income. Let us help if you need it.  Be blessed this week!
    If you are in need of financial coaching and would like a consultation email us at:
    foffcoaching@gmail.com

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    F.O.F. Financial Coaching LLC
    "Where you choose Faith over Fear for your Finances"  
  • 2 comments:

    1. email me the blogs thanks Auntie

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      1. Submit your email at the top of the page and they should email to you everytime a new blog post is made.

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