Here are some stats I found recently that give us a lot of bad news on how people are managing their money. The highlights (or lowlights if you prefer):
61 percent of workers report they always or usually live paycheck to paycheck to make ends meet. This is up from 49 percent last year and 43 percent in 2007.
30 percent of workers with salaries of $100,000 or more report that they too live paycheck to paycheck, up from 21 percent in 2008.
To get by financially, 21 percent of workers say they have reduced their 401(k) contributions or personal savings in the last six months.
Twenty-three percent of workers who earn six figures or more report that they have also reduced their 401(k) or savings.
Thirty-six percent of workers say they do not participate in any programs such as 401(k), IRAs or retirement plans, up from 31 percent in 2008.
One-third of workers (33 percent) report that they don't put any money aside into their savings each month, up from 25 percent in 2008.
Thirty percent set aside $100 or less per month for savings and 16 percent save less than $50.
Ok, so here's what I get from this:
1. The majority of people are on the brink of big financial trouble. One month without a job and they're in deep do-do.
2. A large portion of people who make a great salary are in this boat. It's unbelievable to me that 30% of people who make over $100k (or more!) are living paycheck to paycheck. Maybe the live in ultra-expensive cities? If so, that's just another reason to move.
3. Reducing savings is never a great option. Isn't there something else that can be cut (like cable TV, expensive vacations, etc.)?
4. Obviously the economy has a part to play in these numbers since things have gotten worse since the last survey. That said, the results weren't all that rosy in 2007 and 2008, were they?
How does living paycheck to paycheck happen? (I've never done it, so I honestly don't know.) Is it an ever-increasing lifestyle as salaries increase? Or maybe it's an income hit that takes away all the slack in an otherwise decent budget? Or maybe something else? Anyone have any insights here?