With higher inflation in the U.S., our dollars are not going as far as they used to.
According to a recent LendingClub report, 64 percent of people, regardless of income, said they are living paycheck to paycheck, which is in-line with the historic high set in March 2020.
But there's a new twist.
The people in the report are not just people earning lower wages. More than half of those surveyed are earning six-figures and are still struggling.
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Part of the problem is spending -- the more money you make, the more you think you can spend.
Retirement Planner Craig Kirsner said that this way of thinking is what can lead to financial trouble.
"The secret to wealth building is to really live below your means," Kirsner said. "It's so easy that when you get that paycheck, and now you're making $100,000 or $150,000, to increase that lifestyle and buy the fancier home, buy a fancier car and buy fancier clothes and I'm not saying you shouldn't have that but you have to be careful about the amounts you're spending."
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Essentially when you spend less. you can save more, which is key for when you retire.
Kirsner added that you should try to invest at least 10 percent of any money you make into savings for the future.
The earlier you start investing, the longer your money has to grow through compound interest.
How do you earn compound interest?
There are a few ways, but Kirsner said the first thing you should do is check to see if your employer offers a 401K or other retirement savings plans and see if they match your contributions.
"Say that if you put in three percent, the employer's going to give you three percent. They're going to match that. That means you earn 100 percent on your money instantly," Kirsner said. "So if you put in $1,000, you have $2,000 working for you."
So how can you cut spending in order to save? Here are five easy steps.
- Create a budget
- Start shopping around for discounts or sales. Look for a better deal on your car insurance, homeowners insurance, or cellphone bill
- Go through your credit cards and look for recurring charges you may have forgotten about
- Don't link your credit card to online accounts
- Consolidate your debt. Transfer balances on high interest credit cards to lower or zero interest cards
