How To Break the Cycle



A new GOBankingRates survey found that 51% of women live paycheck to paycheck all of the time and an additional 23% live paycheck to paycheck for at least part of the year. Comparatively, 46% of men live paycheck to paycheck all of the time and 19% do for part of the year. While these numbers are pretty grim for members of both sexes, it is alarming that nearly three-quarters of women are living paycheck to paycheck at least part of the time.

In this “Financially Savvy Female” column, we’re chatting with Leslie Thompson, CDFA, CPA, CFA, chief investment officer and co-founder of Spectrum Wealth Management, about why so many women are living paycheck to paycheck and what they can do to break out of this cycle.

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Why are so many women living paycheck to paycheck?

The gender wage gap continues to exist, with women earning only 80% of [what] males [earn]. Women are usually out of the workforce longer, which impacts future earnings in the form of salary, Social Security benefits, growth in retirement plans and, possibly, accumulation of investments in their name.

While inflation has declined from recent highs, costs have remained elevated, and this stickiness is likely to stay for years. Non-negotiable spending in costs associated with healthcare, housing — both in rent and the cost to maintain a house — and education make up a more significant portion of one’s budget now versus a few years ago.

[In addition], divorce among people over the age of 50 is increasing, putting more significant strain on the less financially secure spouse, which is generally women. Sadly, some women feel tethered to a current relationship because they lack the resources, either real or perceived, to make it on their own.

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What are some tips for women who want to break out of the paycheck-to-paycheck cycle?

What gets measured gets managed. Using a free budgeting tool to see where you spend money helps to create a budget and measure how your spending has changed. Most people underestimate what they spend or convince themselves that there will be less spending next year.

Get a job or find a higher-paying job to earn money in your name and receive benefits in the form of higher Social Security and retirement benefits.

Survey methodology: GOBankingRates surveyed 1,039 Americans ages 18 and older from across the country between Nov. 9 and Nov. 13, 2023, asking 19 different questions: (1) How much do you plan to spend on flights/hotels this holiday season?; (2) How much did you spend on flights/hotels last holiday season?; (3) Are you taking any of the following steps to save money on travel?; (4) How much do you plan to spend on holiday shopping?; (5) How much did you spend on holiday shopping last year?; (6) How would you compare your overall financial situation this holiday season to last holiday season?; (7) How much do you plan to donate this holiday season?; (8) How much credit card debt do you have right now?; (9) How much credit card debt have you added in the past six months?; (10) What is the minimum salary that would allow you to live comfortably in 2024?; (11) How concerned are you about layoffs?; (12) Do you live paycheck to paycheck?; (13) What do you believe is the likelihood of a recession in the next year?; (14) How much do you plan to spend on your next house?; (15) What is the highest mortgage rate you would be willing to pay for your next house?; (16) How much do you think mortgage rates will fall over the next year?; (17) Have you relocated to a different state in the past two years to find more affordable housing?; (18) Which of these states would you consider relocating to for more affordable housing?; and (19) What percent of your take-home (after-tax) pay do you spend on your mortgage or rent? GOBankingRates used PureSpectrum’s survey platform to conduct the poll.

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This article originally appeared on Nearly 75% of Women Report Living Paycheck to Paycheck for at Least Part of the Year: How To Break the Cycle

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