Paycheck-to-Paycheck Mindset

[wnlbutterfly]

I have really been doing a lot of thinking about this. I believe (for our family anyway), that is it a mind-set. And for us it started with great-grandparents that literally were dirt poor. When you are that poor (and they wouldn't do welfare), you live paycheck to paycheck. It is very hard to pass on financial responsibility or planning to the next generation if you don't have any.

Then the next generation, although most with just an 8th grade graduation, went back and got GED's, went to nursing school (we have a lot of nurses in the family now). This stepped our family up a notch, but they still had that same paycheck-to-paycheck mentality.

My mom was 16 when she got married, had me, divorce divorce. GED, college, and after 15 yrs of WM and saving in stocks, she bought an H&R Block franchise. She now has three offices. Making good money, but she STILL had that same mentality, but there are improvements.

Then there is me...finished high school with honors, graduated college...we struggled too in the early years, but we are doing well and our kids will see parents that are saving money, paying off credit card debt (as well as hearing how it can be such a bad trap to get into). We will talk finances with our children, something that never happened in the previous generations.

DH grew up with grandparents and a mother that were investing since he can remember, saving and budgeting. Although it is me that is the one making the changes here. I think his family made a big impact on me to see that it CAN be done. He is more like "well, spend what you got because there is more money coming in", they never taught him where the money was coming from. But he is changing, he is very proud of what I have done with our snowball.

Anyway....I think a lot of this is passed down from families also, but we all have the capacity to make changes, learn how to do better. Some people just don't want to take the time and do it. Break the cycle!

[SnoopyCool]

He is more like "well, spend what you got because there is more money coming in"

This is exactly how I used to justify overspending. But there may not be more coming in later, as I've seen in my life with this whole lay-off we've dealt with. I am beginning to think that that mindset that I once had was somewhat entitlement driven.

[whitestripe]

when i was in high school i had a job where i earnt $107 a fortnight (five years ago) - it would be gone less than a week after i got paid so then i had a week of no money. once i finished school and got a job, the only time i actually lived 'paycheck to paycheck' was a month when my pay kept getting stuffed up by the payroll manager and they paid me less than i earnt every week for four weeks!
so i guess i was one of those people who snapped out of it very quickly. my mum, on the other hand, is completely the opposite. she has zero left in her bank a few days before pay day each week. i just dont understand it. how hard is it to have a look and see where you're going wrong? it's not like i havent tried either, she just doesnt care.

[disneysteve]

my mum, on the other hand, is completely the opposite. she has zero left in her bank a few days before pay day each week. i just dont understand it. how hard is it to have a look and see where you're going wrong?

I agree. My wife used to work with a bunch of people who were paycheck to paycheck types. On payday, they would rush out at lunchtime to cash their checks so that they had money to buy lunch that day. My wife had direct deposit and didn't even keep track of when payday was. It never occurred to those folks that maybe if they weren't going out and buying lunch everyday, among other things, their money would last a little longer. My wife would brown bag lunch and put a 10-cent can of soda in the fridge while they were ordering out and buying a 60-cent soda from the break room vending machine. Of course, every Monday, they all came in talking about which club they went to over the weekend and what movies they saw and what shopping they did. It was pretty simple to see what the problem was. They just didn't seem to care a bit.

[dmontngrey]

my mum, on the other hand, is completely the opposite. she has zero left in her bank a few days before pay day each week. i just dont understand it. how hard is it to have a look and see where you're going wrong?

Not only do I agree with this, but I have to add: how hard is it to be aware of your bank balance BEFORE you go shopping?? My mom just spends and spends and spends and then all of a sudden there isn't enough money for them to take out her car insurance. Just yesterday she said she cashed a check from her other bank account because she "needed gas and..." Seriously, didn't even finish her sentence about what she NEEDS. FIFTY DOLLARS later - I have no idea where that money is going. Quite the sore spot with me most days....

[Ima saver]

I know a young man who lives pay check to paycheck. He runs a framing crew and pays himself exactly what my husband earns an hour now. He does not have a dime in savings, rents and owns nothing but an old truck.He thinks we are rich. What he doesn't realize is, we have the exact same income but we choose to save part of our income every week. He is 30 now and really needs to grow up and manage his money.

[bjl584]

My friend lives paycheck to paycheck. He is completely consumed with his income at his job. Everything is about how much he earns, how much of a raise he can get, etc. I think that may be part of the problem. Too many of us are caught up with the notion that high income equals being rich which equals a high status lifestyle. Not very many people think in terms of savings, investimg, compound interest, living frugal. Those things are boring and there are real no tangible results or instant gratification to living below one's means.

[wnlbutterfly]

I had to re-post, I just did the taxes for my cousin that is 24 yrs old, MFJ, 2 kids (but they are caring for his brother, mother recently passed). They are getting back $5500, big surprise for them. And she says "YES...that will go right into savings!" I told her I was surprised (because I usually hear...gonna go buy...). I know her brother, just a few years older is a big Dave Ramsey fan and working hard on the baby steps.

I am just so proud of this younger generation of our family that is really making good financial progress. Hope we can keep that going.

[red92s]

Honest confession here: I live paycheck-to-paycheck. I mail off my rent check before there is money in the account to cover it, knowing my direct deposit will show up from my employer. At the end of a pay cycle, I'm typically running a balance of under $100 in my primary checking account (sometimes under $50). I have Ramen Noodles in the cupboard just in case things get really lean one month. I don't really have a "buffer" at all.

BUT, my situation is due to contributing aggressively to savings, not overspending or spending every last dollar I have. I know how much money I need on hand to necessary bills and expenses to make it to the next pay cycle, and funnel the rest towards the emergency fund or other savings goals. There is very little discretionary spending.

After the EF is completely funded or slightly over-funded, I'll probably build a checking buffer for a month or two, then attack the secondary savings goals.

It stresses ME out living that way, at the end of the month worrying about how to make it the last few days . . .and I'm not in nearly as dire straits as most people would be. I can't imagine doing it without knowing there is an emergency fund to fall back on!

[wnlbutterfly]

We used to always be in the red before payday, and I knew that if I wrote a check at WM on Thursday, it wouldn't clear the bank until after the paycheck. Not anymore since they do the EBT now. I knew that was coming. It's only been maybe the last 6 months that we haven't been "broke" right before payday.

Peanut butter, eggs, and pancake mix.....three things that if you are broke, come in handy. My mom always said if you had eggs in the house, then you have a meal.