May 2015: Paycheck to Paycheck Blues

bluesguitarPaycheck to Paycheck Blues

Know: More than two-thirds of Americans live paycheck to paycheck

Do: You can break the cycle. Start by categorizing and prioritizing what you spend.

Do you need a money makeover?

According to a report released earlier this year by the Corporation for Enterprise Development, nearly half of Americans are living in “a state of persistent financial insecurity, making it difficult to look beyond immediate needs and plan for a more secure future.”2

That’s just a lot of fancy words to say that too many of us are living paycheck to paycheck. And it’s not just the lower class anymore. In fact, the report finds that one-quarter of middle-class households fall into this category. So, the question is: Do you find yourself frequently running out of money days before payday? If so, you may need a money makeover.

Here’s how one family did it.


After getting married, buying a home and starting a family, Frank and Amy found themselves in a constant state of just making ends meet. They had a budget, but it was a horrible one. It only roughly accounted for their living expenses, some of which were fixed but many that fluctuated from month to month. So they never really knew how much money they had to spend.



Obviously, Frank and Amy were cutting it too close on a monthly basis. Plus, they had underestimated some of their fluctuating expenses and hadn’t budgeted for some of life’s other necessities like food, toilet paper or even regular haircuts for their family of three. Not surprisingly, they frequently ran out of cash before payday and ended up using credit to cover the gap.

It was time to get real about their budget.

Start smart: Get a budget worksheet


Once they had a better handle on their expenses, they were able to categorize them based on need and priority. It became clear that they could make some quick improvements to their lifestyle choices category to free up funds. Frank and Amy immediately cancelled their gym membership, opting instead for free options like an after-work run outside, bike rides or using the weight set Frank already owned. They also researched on-demand TV and entertainment services and found that they could cut cable altogether. Then, Amy made the really tough decision to turn in her leased car in favor of a low-cost, used option they could purchase outright from a family member.


Even though expenses were eating away at their income, Frank and Amy were also making some really good decisions. They were both enrolled in their employer’s 401(k) plan and saving at least the minimum amount to get their full company match. They were also making an effort to tuck away a little savings each month for emergencies.

This young family also placed a high value on quality family time, trying to schedule a family outing at least once a month. After looking at their monthly expenses and making some choices, they didn’t sacrifice any of these good things. Instead of spending money on their family outings, they started researching things they could do in their community that were low or no cost. They found a lot of fun options and also discovered that volunteering and doing some sort of community service occasionally was a good fit for their family.

The lesson: You can cut back — and you don’t have to give up valuable life experiences. Think about the changes you could make.

Frank and Amy’s story is representative, and for informational purposes only. Source:, June 24, 2013, Source: 2 This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for investment, accounting, legal or tax advice.

Core securities, when offered, are offered through GWFS Equities, Inc. and/or other broker dealers. GWFS Equities, Inc., Member FINRA/SIPC, is a wholly owned subsidiary of Great-West Life & Annuity Insurance Company.

This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for investment, accounting, legal or tax advice.