Financial wellness can cause the unprepared anxiety. When things don’t go exactly as planned in life, and they sometimes don’t, you should allow yourself margin.
In December of 2022, about 166 million people, or 64.4% of U.S. adults, reported having no money left over at the end of the month. This is a year-over-year increase of 9.3 million people, and just below the pandemic-high of 65.7%.1 High earners were not immune, with more than half of those making $100,000 or more reporting that they too were living paycheck to paycheck.
Unfortunately, this has led many people to go deeper into debt. According to the Federal Reserve Bank of New York, in just the fourth quarter of 2022, total household debt increased 2.4%, resulting in a record-high $986 billion in credit card debt.2 The recent pace of debt increase is not sustainable. More than likely, many people will be facing ongoing crises with their personal finances.
The solution is mathematically simple: Spend less than you earn. But many people find this difficult to put into practice because it requires them to follow a budget. However, there’s simply no way to keep all of your monthly financial transactions in your head. Let alone track all the long-term necessities a budget makes allowance for.
Living with no financial margin is stressful. One unforeseen car repair or medical bill can take a toll on families. A budget can help give you greater clarity that all your money is going where it should. It can even give you permission to plan guilt-free for impractical things like that tropical vacation you've always dreamed of.
If you struggle in the area of budgeting, we have the resources and ideas for helping even the most planning-averse get started and stay on track for the long term.
1. http://go.pardot.com/e/91522/stretching-paycheck-inflation-/92w9zg/1839823213?h=18ngNSDBmlywPbEQE8kcMIyfbqHUP2nSTTzY9S2vh5w
2. http://go.pardot.com/e/91522/ts-news-research-2023-20230216/92w9zk/1839823213?h=18ngNSDBmlywPbEQE8kcMIyfbqHUP2nSTTzY9S2vh5w
