One year, 10 years, 20 years….wow did they go as fast for you as they did for me? And how many of us have made a New Year’s Resolution each year to make next year better than the last? Especially when it comes to finances.
According to an article in Forbes Magazine published in January 2019 just one year ago and one year later than the 2018 PEW Research article mentioned below, as well as a 2017 CareerBuilder study found that 78% of U.S. workers are living paycheck to paycheck. See a pattern? Year after year different studies and research find the same results. What do they say the definition of insanity is? Isn’t it; keep doing the same thing and expecting different results.
Who are these people? Are they people living below the poverty level. No, in fact many are earning by many standards a good income. CareerBuilder reported nearly one in 10 workers making $100,000+ live paycheck to paycheck.
Here are some other crazy statistics reported in Forbes;
• Nearly 3 in 4 workers say they are in debt – and more than half think they always will be
• More than half of minimum wage workers say they have to work more than one job to make ends meet
• 28% of workers making $50,000 – $99,999 usually or always live paycheck to paycheck, and 70% are in debt
Clearly the Financial Matrix is alive and well as many people have fallen victim to the fact that Financial Literacy is not being taught in our schools. I believe a certain level of financial literacy should be a requirement to graduate from Middle School and a greater level of literacy at the High School level. You may ask how and why should we expect a certain level of financial literacy even at the Middle School level? I live in Central Pennsylvania where a significant number of my friends come from an Amish and Mennonite background and many of them attend school until the 8th grade (Middle School). For many of these families this age group enters the work force and many even become entrepreneurs, if not immediately soon after. This takes an understanding of handling money, investing in their business, understanding cash flow, operating budgets, and concepts such as credits and debits. You are never too young to learn about money, something that affects our lives forever, even after we die, think inheritance and legacy.
What are some changes we can make right here and right now? Let’s see what the most financially successful investor of our time Warren Buffet says…
In two CNBC make it Articles published; May 10 2018 on Money, and Apr 30 2019 about Power Players, Warren Buffett says avoid debt at all costs. If legendary investor Warren Buffett could give one piece of advice to young people, “it would be just to don’t get in debt,”. He told this to a 14-year-old shareholder at the 2004 Berkshire Hathaway annual meeting.
“It’s very tempting to spend more than you earn, it’s very understandable,” he said. “But it’s not a good idea.” And if you’re deep in the red, it may be a good idea to “never look at a credit card the rest of [your] life,” Buffett added.
Warren Buffett, who is worth nearly $89 billion according to Forbes, is famous for spending only $3 a day on breakfast. Buffett said he uses cash “98% of the time. Buffett’s tendency to use cash puts him in the minority among Americans. Using cash, however, can actually be a good way to save money. And researchers have found that physically handing over money feels painful, making you less likely to do it.
In 2018, only 18% made “all or almost all of their purchases” with cash, according to the PEW Research Center. About half (52%) of Americans made “some” of their purchases with cash and 29% made none of their purchases with cash.
That is over 80% which is very similar to the percentage of people who are 90 days from bankruptcy. In other words if they did not have a check come in for 90 days they would have to start selling items to pay their debt obligations.
So….What changes are you going to make in 2020 that you promised yourself you were going to do in 2019, and maybe also in 2018, 2017, 2016, and 2015?
Now is the time! Let’s make 2020 a New Beginning.
Get Financially Fit.