Living paycheck to paycheck? Avoid these mistakes

Millions of Americans are living paycheck to paycheck. But while around one-third of Americans, or 38 million households, are living hand-to-mouth, they aren’t technically poor, according to the Brookings Institution, a nonprofit that conducts independent research. In fact, nearly one-third of households earning $75,000 or more annually live paycheck to paycheck at least sometimes, according to a survey by SunTrust.

What this data suggests is that while you might climb the proverbial corporate ladder and make more money, poor finan- cial habits can follow you, continuously sabotaging your finances. If you’re living paycheck to paycheck, here are three common money mistakes you might be making.

■ You overspend: One in five Americans spends more than he or she earns, according to a Federal Reserve Board report. And 44 percent of those surveyed by SunTrust agree that spending on lifestyle purchases, such as dining out and entertainment, is part of the reason they live paycheck to paycheck and save less than they should each month.

A few years ago, Michelle Schroeder-Gardner was living paycheck to paycheck because she was spending about $1,000 a month on restaurant meals and about $500 a month on clothing. “At the time, I didn’t realize what kind of problem I had,” said Schroeder-Gardner, who now blogs about personal finance at MakingSenseofCents.com. “I was young and not very smart about money, plus it seemed like everyone else around me was doing something similar.”

She broke her cycle when she realized she had a spending problem and made a conscious decision to rein in her spending.

■ You don’t have a financial plan: Only 20 percent of adults have developed a written financial plan, according to Northwestern Mutual’s 2015 Planning and Progress Study. Brian Brandow was among those without a plan for his money. As a result, he was living paycheck to paycheck.

“We finally had a rock-bottom moment and had accumulated $109,000 worth of debt,” Brandow said. So he and his family built a budget and created a plan to pay off their debt. They are now debt-free, and he blogs about being responsible with money at DebtDiscipline.com.

If you don’t have a plan for your money, one use of it is as good as any other. Without a plan, you invite reckless spending in your life and create new hurdles for getting ahead financially. Learn how to create a spending plan so you can align your expenses with your goals.

■ You don’t have a financial cushion for emergencies: More than 60 percent of Americans have less than $1,000 in savings, according to a recent GOBankingRates survey. This survey suggests that the majority of people likely don’t have enough set aside to cover unexpected expenses or emergencies.

You should create an emergency fund, said Bethy Hardeman, chief consumer advocate at Credit Karma. You can find extra money in your budget to set aside by looking for expenses you can cut, such as subscription services or a gym membership you’re not using, she said. Also, look for fees you can eliminate, such as bank account charges you can avoid by switching to a financial institution with no-fee checking.

You can also come up with extra cash by negotiating lower rates with your service providers, said Nicole Lapin, a financial expert and author.

“Do a yearly housekeeping call to all of your major bill generators — your cable, phone and Internet companies — and see if there might be a better deal available,” she said.