[notJim]

The living paycheck to paycheck stat is meaningless. It generates headlines, because bad news wins, but if you dig in, even the surveys that ask about this reveal that a large percentage of people living paycheck to paycheck are very financially secure, both objectively, and according to their own assessment. I don't have time right now, but I'd encourage anyone reading this to go find the actual source for this stat and read their full report. Last time I looked, it was freely available.

Many of those people living paycheck to paycheck have a budget where they're saving or investing a significant amount of their money, and accordingly, money feels tight. This is the financially sound way to avoid lifestyle creep, but it doesn't mean you're in a precarious position. Or alternatively, they're paying for really expensive, but optional things like private schooling and expensive cars or vacations.

Obviously some people are struggling, but this paycheck-to-paycheck stat is not an accurate way to quantify that. It's best IMO to look at objective metrics like the poverty rate, or people's objective financial picture (available via surveys.)

[SoftTalker]

> Many of those people living paycheck to paycheck have a budget where they're saving or investing a significant amount of their money

I don't think that's the common understanding of what "living paycheck to paycheck" means.

[bombcar]

The most common one is saying that someone is paycheck to paycheck but they're also funding their 401(k) up to company match, etc.

It's usually just the inverse of saying most people don't have ready cash savings laying around; because there's no need to when you have credit every which way all the time.

Much better to look at the debt load on people and how that changes over time. Someone who makes $5k a month and spends $3k on debt service and lives off $2k is going to feel much different from someone who makes the same $5k, lives on $2k, and spends $3k on candles or whatever (since they can stop buying candles anytime but you can't easily stop paying down debt).

[potato3732842]

That's exactly the point he's making. That exact slight of hand underpins all those "huge percent of population living paycheck to paycheck" headlines.

[ptmcc]

I love seeing this in those periodic ragebait articles about how a family earning 400k+ is "paycheck to paycheck" after maxing out their retirement accounts, paying for private schools and vacations, mortgage on a $2m house, car notes on two newer luxury cars, etc. etc.

"After long term saving and paying for my indulgent lifestyle, I just don't have anything left at the end of the month!"

[solraph]

> periodic ragebait articles

Somewhat offtopic, but I call these articles "parading the idiot". Where a newspaper or other media outlet runs an article interviewing a person where the subject is clearly out of step with everyone else in their assumptions.

See also articles where a property investor complains about how hard they are doing financially because they have to sell one of their eighteen investment properties.

[ragnese]

I find it pretty egregious that someone who is saving/investing a chunk of every paycheck could be considered to be "living paycheck-to-paycheck." I feel like the most obvious definition most of us would assume is that nearly 100% of your paycheck gets spent on goods and services, and/or bills and debts, before your next paycheck.

[jandrewrogers]

The Federal Reserve has pretty detailed studies on this that take a nuanced view of spending behavior. Households with no excess income after necessary expenses are in the 10-15% range. The methodology is designed to exclude the diverse scenarios under which having no apparent excess income is an artifact of lifestyle rather than an economic reality.

[gruez]

>living paycheck to paycheck have a budget where they're saving or investing a significant amount of their money

How can you be "paycheck to paycheck" if you have a massive savings pile? Are you dumping it all into 25 year treasuries?

[Workaccount2]

This is literally me. I live paycheck to paycheck but also have a six figure sum of money I can tap into if needed.

How I got here is living way below my means in my twenties, saving up tons of money, and nowadays living at my means while still maxing retirement. I also have almost all that saved money invested, which just grows the pot as it sits. I also have zero debt besides a 3% mortgage.

So basically I spend all of every paycheck, after retirement has been deducted, but if I lost my job I could maintain my current life with zero income for a few years before running dry.

[lukas099]

> Many of those people living paycheck to paycheck have a budget where they're saving or investing a significant amount of their money, and accordingly, money feels tight.

I don’t understand. Isn’t everybody living paycheck-to-paycheck then?