Interestingly, nearly 3 out of 4 Millennials and Gen Z participants of the study wondered how their friends could afford the lifestyles depicted on social media. To compound the issue, nearly half of the Millennials confessed they were influenced by social media to spend more money on experiences. Also, nearly half of Millennials admitted to spending more money than they could afford to participate in experiences with friends.
With 59% of the survey participants responding that they lived paycheck-to-paycheck, results reflect the dangers of the “Keeping up with the Jones’” lifestyle. The survey further noted that 44% of the participants carried a credit card balance.
What does all of this mean exactly? We are spending money that we do not have, to buy things we do not need, for the purpose of impressing people we do not actually like.
There is Hope of Breaking the Cycle of Living Paycheck-to-Paycheck
During the studies of Millionaires performed by Thomas J. Stanley and William D. Danko as well as the more recent study performed by Chris Hogan, it was very evident that most Millionaires in America achieve their wealth with average incomes. Therefore, income is not the problem that holds us back from becoming wealthy, rather it’s our spending habits.
The concept of our spending habits, rather than our income as the source of our poverty, was further confirmed in Schwab’s survey. The wealth survey revealed that on average we spend $500 a month on non-essentials. By identifying the $500 a month in your own life, you can redirect the funds to improve your financial status.
I know some of you are thinking either you don’t make enough money to have an extra $500 or there is nothing in your life you can cut to save that much. Trust me, you do make enough money and you definitely have something you can cut.
Here are a few items to think about when trying to decide what to cut:
– Brew your own coffee instead of buying it. You don’t need to give up this habit, just adjust it.
– Preparing your own lunch instead of eating out. Buying lunches alone is probably $500 a month. Just face it, fast food gets boring after a while.
– Begin a program to give up tobacco. “Tobacco is good for you”, said No One Ever.
– Consume less alcohol. Let’s face it, not every day is the weekend.
– Cancel some of your TV subscriptions. Do you really watch everything on Hulu, Netflix, Amazon Prime, Disney+, etc. or will having just one do fine?
– In-App purchases on mobile games. There is no need to live in poverty in the real world so that your character is a king in an irrelevant world.
– Stop attempting to live how others appear on social media. If the survey hasn’t made it clear, they are probably living in poverty to give the illusion they are wealthy.
The possibilities are endless on how to reduce expenses in your life. If you can’t think of where to start, get a small notepad and pen. Carry the notepad and pen with you every day for a week. When you pay for something, write down what it was and how much you spent. At the end of the week, review where your money went. I am positive you will find purchases in your notebook that you can probably do without. Either cut those things out of your life or find an alternative that won’t cost you as much money.