Financial Struggles and the Era of the Constant "Bad Economy"

We are arguably in the best economy in a while in our country.  Growth rates in Q3 were nearly 5%, and unemployment numbers currently hover just under 4%-those are really good numbers.  This is a sustained period of low unemployment, and inflation rates are starting to normalize.  You likely felt that this past weekend if you travelled for Thanksgiving-I was able to fill my tank for less than $30 for the first time in eons.  This is kind of a miracle, given how long we've had sustained growth, particularly after the final year of the Trump administration (during the Covid era) basically tanked the economy.  But if you listen to surveys or polls, people are anxious & upset about the current economy, and are taking it out on President Biden and his approval ratings.

I am not an economic expert, and I'm not going to weigh in on economic policy specifics, though I do think that the Biden administration does need to find ways to start talking bread-and-butter on the economy if they hope to extend their lease on the White House for another four years (I personally think that if Biden's numbers on the economy would get better, people would care a lot less about his age).  But I am going to talk today about money, one of my favorite topics, specifically my relationship with money, because while I am not an economic expert, I do see things (plus this is a personal blog-I can talk about whatever I choose), and I wanted to talk about the weird shifting dichotomy people seem to have around money, and what counts as "paycheck to paycheck," "lower income," and "financially struggling."

I didn't realize that people disagreed on the definition of "paycheck to paycheck" until I realized that I disagreed about the concept of paycheck-to-paycheck.  I don't live paycheck-to-paycheck, in the literal sense of the definition.  If I missed my next paycheck, it would be uncomfortable, and I'd absolutely have to dip into my savings account (or carry a balance on my credit cards), but I would ultimately be fine.  I couldn't go without pay forever, but missing one paycheck would not result in me losing my house, my car, putting my credit at risk, or meaning I couldn't buy groceries or pay for my utilities.  In the most literal sense, I do not live paycheck-to-paycheck.

But I probably would've said if you'd asked me this six months ago that I do live paycheck-to-paycheck, because I do have bills that I need to pay each month which means I spend almost all of my paycheck each month, and I frequently worry about my ability to afford things.  At the end of the month, I scrape together approximately $225 into savings, which is honestly pretty good compared to the average American.  But I frequently view that as my only cushion, which isn't technically true (we'll get into that in a second), but it does mean that I feel a lot of pressure to not add anything additional to my budget, even though I have house repairs that need to be done, I have a pretty old car I need to replace, and I am not fully hitting my retirement goals, none of which I can currently afford without massive changes to my lifestyle (or more money).  And that $225 has gotten smaller in the past couple of years as inflation, particularly on items like car insurance, streaming services, & my property taxes, have all gone up faster than my wages did.

I think this is where our first juxtaposition happens-people conflate "paycheck to paycheck" with "struggling to make ends meet" which is not the case.  This video went viral on Twitter today, with a dual income couple claiming that they lived paycheck-to-paycheck.  The woman in the video, a registered nurse, said that after they had paid off some bills and their mortgage, they had ten days before they were paid again and had $300 to live off of for those ten days.  That probably means that, given they are a family of four, that they will have little to no money by the end of that time given they'll have to buy gas & groceries.  This might mean they are living paycheck-to-paycheck, given they are out of money before their next paycheck arrived...but that also could be not the case.  In the video, the family has nice furniture, decor, and a large-screen television, all of which are not necessarily "paycheck-to-paycheck" purchases.  It's also not clear if they are counting savings account deposits or retirement as part of their bills, which many people do (for example, I take money out for retirement each paycheck that I don't think of as part of my monthly pay, even though it technically is).  From what it looks like, they are clearly struggling with their financial situation, but probably are not broke or living "paycheck to paycheck."

I think part of the concept of more-and-more people thinking about themselves struggling or not being able to make ends meet is partially an increasingly skewed view of what your "essentials" are.  Reading articles about people who make over $100k and are "struggling" gets some snickers from those online, but it also shows a look at how lifestyle changes have changed what we think of as mandatory.

Thirty years ago, it would not have been a requirement that every person in America have a cell phone and internet service, and cable television was a luxury.  Now, a cell phone, internet, and some form of entertainment service (either cable or streaming) feels essential as part of day-to-day life, and with the exception of a landline phone, no expense has really "disappeared" from what you would've had thirty years ago.  We have more financial expectations today than we would've in the 1990's.

There's also the pressure of social media, which is a real thing.  Particularly for Millennials & Gen Z, who define their relationships and existences through social media, there's a constant urge to put out a persona or keep up with a persona that is unrealistic or highly stylized.  We talk about how "Facebook/Instagram aren't real life," but it's hard not to buy into that when it is how we meet people, how we keep up with relationships, frequently how we meet romantic partners...social media is real life if this is the primary avenue for dating, sex, & friendships.  We are expected to be culturally-aware, travel frequently, eating at trendy restaurants (or making restaurant quality meals at home we saw on TikTok), working out at a gym, wearing the latest fashion trends, & decorating our homes with cute decor and modern technologies.  All of that costs a lot of money.  And it becomes more engrained in us because we aren't seeing this in commercials-we're seeing it in our coworkers or our college classmates or our neighbors or our ex-boyfriends' photos.  It's people we know-if they can do it, why can't we?  And when we can't afford it, we assume we are struggling financially by comparison, even if this is obviously a heightened reality that is projected in a social media account.  People say "get over it," but, like...if you're living great swaths of your life online, it's a lot easier to "get over it" when it's not your life that you're feeling is coming in last.

Other factors come into play here.  Dual-income families came into vogue in the 1980's & 1990's, in most cases with not a lot of increased expenses other than (at the time) relatively affordable child care.  This meant that Baby Boomers & Gen X could get ahead in a way that Millennials & Gen Z cannot (i.e. in some cases, it's cheaper not to work than to pay for quality daycare in 2023).  Millennials & Gen Z are also waiting to get married, and in some cases not doing it at all.  In 1980, 6% of Americans over 40 were single.  In 2023, it's 25%, and growing every year.  As a single home-owner, I can tell you-this system is not meant for someone like me to succeed, and I have to constantly remind myself when I feel like I'm failing my neighbors by not having the prettiest yard or having to wait to do a repair to my siding, that they have two incomes, and I need to go at my own pace.  That's something I'm aware of-but I still think of it as a "financial struggle."

This is an interesting conversation without a lot of great answers.  I think one is having honest conversations about money with our friends.  Being realistic about whether or not that trip was paid for by a parent or by a massive credit card debt honestly can help someone else understand "this is why you aren't doing this."  Putting a face on a problem always helps.  I also think it's important to occasionally think about what you do have, and not just in a "you've got a lot of love" sort of way.  Talking about the investments you're making in your future (like if you're foregoing that vacation because you're paying off a debt or putting more into your retirement) is good to acknowledge so you know you're doing something right, and if you are spending too much on something you aren't getting value out of (like streaming services you aren't using)...this is a good reminder of why to get rid of them.  Retirement planning & saving, in particular, is a conversation I think most people would benefit from, because I'm always surprised when I bring it up the wide swath of steps people have taken (and how few people know what they should save, even the people who are doing a good job).

Also, I'm going to end with a bit of a soap box moment here-Millennials & Gen Z, you might have some unique financial issues that previous generations didn't experience (specifically the ballooning cost of real estate and student loans), but we also have advantages too.  We have access to work-from-home in a way previous generations didn't (i.e. less commuting cost), and more of us waited to live away from home so there was more time to save.  We can stay on our parents' health insurance plan until we're 26 (well, older Millennials couldn't-but certainly Gen Z can), saving on insurance costs.  And it's increasingly easier to make money through non-conventional means, like the internet, to supplement our regular incomes if we so choose.

Not to sound like too much of an old man on a porch, but-if you want a house or to pay off your student loans, you kind of just have to do it.  My parents didn't have student loans, and they bought a house when they were 24.  I had to pay off my student loans for twelve years, in some cases not taking any vacations that year and spending all of my extra money on them...but I did it.  I might've taken ten years longer to buy my dream house than my parents did...but I did it, and am currently tracking to have it paid off before I retire.  I am not saying that it's easy, but I am saying that the concept of home ownership and living debt free might take longer, but it isn't out-of-reach.  It just means you will have to make sacrifices (including geographic ones), you will live in a situation where you're "financially struggling" and it will mean it doesn't look like what your parents' lives looked like.  But the reality is-that is ultimately the case for each generation.  The Baby Boomers had different financial advantages & disadvantages than the Greatest Generation & Silent Generation before them, and Gen Alpha will get its own set of cards.  Millennials & Gen Z have to deal with the largest income discrepancy between the wealthiest and the "rest" than any generation before it, and it is important to vote for politicians who will change that.  But in the meantime...our parents do have a point (to a degree) when they highlight that some of our financial complaints are "just an excuse."  It's worth asking yourself: are you truly living paycheck-to-paycheck, or are you just worried about money?