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There's a good chance you or someone you know is facing the reality of living paycheck to paycheck each month.
According to a recent MetLife's 17th Annual U.S. Employee Benefit Trends Study, 5 in 10 employees said they live paycheck to paycheck. This is most common among millennials and Generation Z, with 60% and 56% reporting that they live on a paycheck-to-paycheck cycle, respectively.
And although the study shows that more than half of millennials are living paycheck to paycheck, 64% stated they “feel in control of their finances.” This indicates a big disparity in the perception and the reality of how younger workers manage their personal finances.
By not maxing out your means each month, you'll empower yourself to be able to cover unexpected expenses, save for the things you want today and in the future, and eventually retire with a comfortable nest egg.
Your cash flow is made up of how much money you have coming in each month and how much money goes out. You have to know what’s actually happening with your money now before you can make a plan to change it. Ask yourself questions like:
Once you understand your cash flow and start asking those questions, it might become a little easier to see the costs you can cut back on or eliminate entirely. You may not want to give up on things you love most, and you don't have to — but it is important to identify what doesn't mean very much to you and cut that out of your budget immediately.
Here are some examples of expenses that you may be able to eliminate or spend less on:
Cutting costs and controlling your expenses is a critical step in breaking the paycheck to paycheck cycle. But that's only one half of the equation. The other? Earning more money as you also spend less. Here are just a few ways you may be able to generate more income:
Once you start having a little money left over at the end of each month, the next step is to strategize what to do with that extra cash. Those tactics can include:
By breaking the paycheck to paycheck cycle, you can focus on what's most important to you. For more tips and advice on how to take the stress out of managing personal finances, access more MetLife resources here.
This content is intended for informational purposes only, and is not intended as, nor should it be deemed to be, individual tax, investment or financial advice.
Nothing in these materials is intended to be advice for a particular situation or individual. These materials are for general information purposes only.