The Rachel Cruze Show - Why So Many High Earners Still Live Paycheck to Paycheck

Starting point is 00:00:05 Why does it feel like so many high-income earners are still living paycheck to paycheck? Well, spoiler alerts, it's more than just lifestyle creep. So today we're going to talk about the common reasons why people still feel like they are stretched thin financially, even when their salary goes up. Make sure to subscribe, share this episode with the friends. All right, you guys, number one, the first reason. It's pretty obvious, but it's the increased cost of living. So this is a legitimate issue that does affect people on all income levels.

Starting point is 00:00:32 According to the Bureau of Labor Statistics, the average monthly expenses for an American household are about $6,440. That's a total of $77,280 per year, and the average annual salary in the U.S. is only around $61,900. If those exact numbers apply to you, then you are coming up more than $15,000 short. So obviously this depends on several factors of why this is happening where you live. This is a big one. Depending on your city is going to be a huge deterrent because it's either like maybe it's a metropolitan area, maybe it's a big city, a very expensive city. Or maybe you're more, I don't know, in the Midwest or the South and you're like, it just

Starting point is 00:01:16 doesn't feel that expensive. And how many kids you have, this is a major factor as well, because obviously the more kids you have, the more expensive life is. Also how many incomes you have is also a factor. Now dual income households is pretty common today. but we do find that people are trying to live on one income. Some people are doing it well. Some people not so much. Also, whether you're juggling minimum payments. So debt is a factor in this too. But regardless, cost of living will rob you a financial piece if you're not running the numbers and

Starting point is 00:01:46 making reasonable adjustments. We have a cost of living calculator that you can check out just to look at your current situation. And sometimes a job pivot or even moving to a different area might be right for your family and those are some really big decisions but also you may see okay the numbers are just not working and we don't see a way out so I'll put a link for that calculator down below. Okay reason number two I mentioned it earlier but lifestyle creep is a real thing so you guys what's wild is as your salary increases and you get raises over time right you you're better at your job maybe you move jobs whatever that looks like you end up living up to what you're making And instead of saying when you were 20 years old, like, oh my gosh, if I ever made X amount of what you're making now, you're like, I would be great. I would do fine.

Starting point is 00:02:31 But now that you're there, you're like, no, it's all this other life circumstances around us. And I really do believe our standard of living, what we feel like is normal, is higher than it was in generations past. And so all of that is a factor. So as you continue to make more, if you're not careful and you're not diligent, you will just keep spending up to that line. And so you have to have the discipline to say, okay, here is a very. where our lifestyle is. If we make more money, how do we up our lifestyle by a small percentage, but also use that margin to do things that create peace in our lives? And that's getting out of debt and an emergency fund. So all of that is so, so important. All right, hot take. I would take

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Starting point is 00:03:51 me. Go to join delete me.com slash Rachel for 20% off, bringing your monthly costs to under $9 a month, or you can click the link down in the description. All right, reason number three, that feels like we are living paycheck to paycheck, even if you're earning a high income, is not living debt-free. So you have to understand that just earning a income that is higher than what you are now doesn't mean that, okay, I can make more payments then. And that's how a lot of people have the psychology. They're like, okay, I can just afford a bigger payment. so I'm going to continue to go into debt and live with debt. And debt steals your income.

Starting point is 00:04:27 That's what happens. You take this great big income that you have, especially if you're a high earner, and it comes in. And if it's still going back out 18 different directions on more expensive debt than maybe you had 10 years ago, it's still leaving. It's still not giving you not only the cash margin,

Starting point is 00:04:41 but also the margin to go and invest for you to be able to build wealth yourself. So we are making the financial industry and banks rich versus ourselves. And we don't want that. We want to build wealth and create security and peace for us. So getting out of debt is a big part of not living paycheck to paycheck, even if you're a high income earner. And the fourth reason is possibly who you're surrounded by. So what you'll see is as you make more money, you tend to spend more time around other high earners. So you're a new norm of people. Maybe it's a small circle. Maybe it's because you move neighborhoods or you move to a different part of your city or maybe your kids are starting a different school because maybe you can afford the private school or maybe it's the sports leagues that you're in and you have the ability to like be in, you know, better, more elite sports leagues. Like whatever the thing is, you slowly, if you look up, you end up being around people that have

Starting point is 00:05:36 to a degree the same income level as you, not always, but sometimes. And then what happens slowly over time is your normal is then around other high income earners. And if all of them are living a well-off life, then that is what you keep seeing day in and day out as normal. And so you almost become desensitized by it where you keep thinking like, yeah, this is what it should be. This is how many vacations I should be taking. This is what my vacations should look like. This is the kind of car I should drive. This is how my house should be decorated. Like all of that changes the scope of how you view money and how you spend your money. And so suddenly you are keeping up with the Joneses. Maybe a different kind of Joneses, but they're the Joneses. And then the crazy thing about all of this is that they

Starting point is 00:06:18 could be living paycheck to paycheck, and you have no idea. So it is pretty wild where we are all at, but listen, people will pull some pretty wild moves when they are trying to not live paycheck to paycheck. And if you want to see my reaction to some of these habits that people take on, make sure to catch my episode, 10 habits that scream of trying to look wealthy. I'll put a link down below. All right, you guys, remember to take control of your money and create a life you love.

The Rachel Cruze Show - Why So Many High Earners Still Live Paycheck to Paycheck

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