Whether it's because of inflation or simply living beyond their means, more Americans are pushing their economic limits. A new survey finds more than one-third (36%) of Americans making at least $250,000 annually are still living paycheck-to-paycheck. This comes on the heels of a survey earlier this year that found nearly half of Americans making at least $100,000 per year are draining every paycheck.
The survey authors note living paycheck-to-paycheck doesn't necessarily mean people are struggling, but it does mean that all of their monthly income is spoken for, with nothing left over for savings or unexpected expenses. "Ideally, you should save 10 to 15 percent of your income into some kind of retirement plan or cash savings for a rainy day," says Mitch Kramer, financial planner with Texas-based Fluent Financial. "If that margin has evaporated, you really need to take a hard look at your expenses to find where you can cut."
Kramer tells KTRH the biggest expense factor eating up income for many high-earners is housing. "They're buying houses that are probably at the maximum of what they can afford, so they have very little margin left in their budget for the inflation spikes we've had over the past few months," he says. "And these people are now having to dip into credit cards or cut discretionary spending to make ends meet."
Whether you're in the $250,000 bracket, the $100,000 bracket, or somewhere below, Kramer warns you should limit expenses to avoid living paycheck-to-paycheck, starting with housing. "It's not just housing prices, here in Texas we have high real estate taxes and homeowners insurance costs as well," he says. "So be very careful not to buy too much house, and give yourself some margin for those emergencies that are going to happen."
Kramer's other big piece of advice is to avoid patching your income problems with credit cards. "Do not be tempted by the credit card flyers in your mailbox," he says. "The banks love credit card debt, it's a very high-margin product for them, but it's bad for you...so when you get those credit card offers, shred them and treat them like kryptonite."
That leads us to our poll question this morning.