This, of course, means that the other 22% of Americans aren’t living paycheck to paycheck. They have a life such that if they missed their next paycheck, they wouldn’t be in any sort of major financial crisis – and for most, they could miss the check after that and the check after that and so on.
I’ve lived on both sides of this equation. Earlier in my life, I lived paycheck to paycheck. If I had missed a single paycheck for the first decade or so of my professional life, I would have been in instant crisis mode. Now, I’m on the other side of that. If I missed a paycheck today, it would be vaguely annoying and I’d want to fix the problem, but I wouldn’t start worrying about losing my house or how to put food on the table, even after several months.
What did that really change about my day to day life? I sat down and made a list of several things that really changed, along with a few things that I thought would change but didn’t. I thought it might bring some valuable insight to people who are trying to move out of the “paycheck to paycheck” group.
It won’t magically make you happy.
Almost always, people see the green grass on the other side of the fence and think that they’ll be happy once they get there. “If only I had my debts paid off and some money in the bank, then I’d be happy.”
Guess what? If you’re not generally happy now, getting your finances in better shape won’t magically make you happy. It will get rid of some serious irritations that can gouge your happiness (and we’ll get into that in a bit), but it won’t magically bring happiness into your life.
For a long time, I thought that getting my finances straight would make me a happier person, and when I got there, I realized I wasn’t really much happier than before, not at all. I can kind of judge that based on my own journal writings – I’ve been writing in a journal almost daily since I was a teenager, and I still have a lot of those entries in some form or another.
If I look at entries in my adult life when I was really financially struggling and I look at them after my wife and I got our financial ship in order, I find a roughly equal mix of positive and self-critical writing on both sides of the fence. I didn’t magically become this super-happy person. Rather, many of my personal concerns moved on to other areas.
I don’t believe there is a magical recipe for being happy. All you can do is cultivate a life where happiness blooms easier than before, but that won’t make you suddenly happy all the time. Life will always be imperfect and have struggles. However, I do believe that financial success can be a part of that cultivation of a life where happiness blooms, and here’s why.
A financial turnaround will get rid of a level of background stress that you probably didn’t even notice.
The biggest change I noticed in my day to day life was that there was this constant background stress related to money that gradually lifted away over time. Getting rid of it didn’t bring joy, but it made every other burden in my life feel a little lighter.
Before the financial turnaround, I felt a constant restriction on what I was able to do. I would often feel like I couldn’t do X or that Y was too big of a risk, and that just hung over every decision like a wet blanket. Sometimes, I’d just rebel against it and do things that I knew weren’t financially wise, and then I’d regret it and the loop would start all over. It was like carrying a wet blanket around on your back, occasionally tossing it off, only to find that it would land right back on you, soaked a little bit more.
After the financial turnaround, that wet blanket was gone, and the removal of it was so gradual that I didn’t notice it leaving until it was gone. It didn’t mean that I wasn’t still carrying burdens, but it meant that one particular wet blanket was gone.
Even more interesting, I basically lost my desire to do the things that were centered around “shaking off the wet blanket.” I used to just go spend money almost out of a sense of frustration about my financial state, like a weird form of self-destructive financial rebellion. The things I used to do completely lost their appeal once I had my financial house in order. I would do things like go to the bookstore and buy six books, or go out with friends and buy a round of drinks for no particular reason. I would often do that to show myself that I was “free” from that wet blanket of financial stress, even though I wasn’t; now that I am actually free of it, I feel no need to do those kinds of things.
It will also make peak stressful situations a lot less stressful.
Another positive change is that really stressful situations are now a lot less stressful than before.
Spending money on stuff that really doesn’t matter to you seems a lot more wasteful.
A big part of crossing over that line and leaving the land of paycheck to paycheck living is a careful consideration of the ways you’re spending money. You start looking at all of the stuff you buy and start asking yourself which ones really matter in your life and which ones do not.
Does the type of laundry soap you use really matter in any meaningful way? It might if you have hyper-sensitive skin or an allergy or something, but for most people, it really doesn’t have any consequence. You end up repeating that same question for a lot of things that you spend money on, from your household goods to your food, from your entertainment services to your cell phone plan options, from your insurance to your car and housing.
Because of that, you cut a lot of stuff. Usually, you end up realizing you cut too much and you miss a few things, so you bring them back (or it makes you so frustrated that you just go back to paycheck-to-paycheck life entirely).
But when you really cross that line into no longer being stressed out about the next paycheck, you’ll also begin to realize that your life is still really good in all of the ways you care about, and that all of that money you spent on the things you don’t really care about was pretty wasteful.
Eventually, that becomes something of a perpetual mindset. You begin to really doubt the point of spending money on things that you don’t care about very much. Why do it? Why throw money at something that’s pretty low down on the list of importance for you? There really isn’t a reason, but many people just do it out of habit and routine.
Your dreams and goals will shift in unexpected ways.
The same kind of thing happens with your dreams and goals, too. Many of the goals you once had will start to seem less important and meaningful, and other goals and dreams will pop up to replace them over time.
I used to have a lot of dreams about having a big, expensive house, but as I crossed that line, that dream began to feel more and more out of touch with my life. “I could do this now, but why?” This was true for a lot of different dreams I had.
Why? A lot of those dreams and goals were really about “shaking off the wet blanket” of debt and financial restriction rather than being in line with your values. My dream of having a big house in the country was, in many ways, a symbol of having achieved financial success. When I started to achieve financial success, I began to realize that the dream of a big country house was just a symbol, something that I wanted because having it would mean that I had achieved the kind of success I wanted in life.
The things I really wanted were a close-knit family, a lot of good relationships with friends, a lot of good connections in the community, health, hobbies that I deeply enjoy, and things along those lines. This was not fully clear to me until I actually had financial stability and a lot of those expensive things were easily within reach.
I could have that house in the country right now, but I actually don’t want it, at least not for the cost I’d have to pay. I could have an amazing car right now, but I actually don’t want it, at least not for the cost I’d have to pay. It turns out that what I really wanted was the financial stability to have those choices on the table, at which point they didn’t actually seem that appealing any more.
The fact that you can spend doesn’t mean that you do spend.
One key difference that I noticed is that I gradually began to recognize that money in my checking account doesn’t need to be spent as soon as possible.
Before the turnaround, I would often hit the ATM or online banking to check the balance of my checking account, and that balance would often determine whether I did something or not. If there was money in that checking account, I was going to spend it, sooner rather than later.
After the turnaround, I almost never check my balance. Why? I simply don’t feel the urge to spend money just because it’s there. I spend money when I really genuinely want something, not when there’s just an impulse to spend. If I listened to every impulse to spend, I would quickly be bankrupt and have more stuff than I could ever actually use.
Once you realize that you don’t actually need or deeply want all that much stuff, that you already have an absurd abundance in your life, the draw to spend just because money is burning a hole in your pocket fades out. It just isn’t there any more.
This takes a while. I found that a great intermediary step was simply automating a lot of my financial moves. I automatically contributed to my children’s 529 plans. I automatically contributed to my own retirement plans. My wife contributed to hers. I automatically contributed to an emergency fund. I set up a lot of automatic bill payments. I set up automatic savings for our next car and for irregular bills. As a result, there often wasn’t much cash at all left behind – enough to buy groceries and household supplies and to fill a small hobby budget and that was about it.
Eventually, though, I realized that I had a pretty good life without that money sitting in my checking account, and the feeling that I should be spending that money if it’s just sitting there kind of faded out.
Don’t get me wrong, there are still things I want to buy, but that impulsive need to spend just because there was money in my checking account faded away.
You feel a little less tied down.
One thing I didn’t realize when I was living paycheck to paycheck is how intimately tied I was to the ordinary routines of my life, particularly my job. Part of the reason I was so diligent about my job and wound up working weekends and traveling a lot is because I was scared to lose the job. I was living paycheck to paycheck, so if I lost that paycheck, things very quickly went south in my life.
As I began to achieve financial stability, I began to look at my job without the weight of absolutely needing that next paycheck and I didn’t like some aspects of what I saw. I probably leaped into a career change more abruptly than I needed to, but it was really an act of freedom. That job that I felt lassoed to, that I needed to stick with, lost that stickiness. I didn’t need to be there.
At that point, I felt much more free to look at other job options and other career paths. If the transition was bumpy, that would be okay – we weren’t living paycheck to paycheck. If my pay was lower for a while, that was okay. If I went for a period without pay, that was okay, too.
What this left me with was the freedom to look for work that was more meaningful to me. I felt that aspects of my previous career, particularly the time spent with coworkers and the time spent on actual tasks that pushed me intellectually, were meaningful, but the rest of it was not and the rest was eating up more and more of my time there.
I wanted work where most of what I did was meaningful and that wound up being writing for The Simple Dollar, something that I’ve been doing for quite a few years now. Most of my time is spent on stuff that’s meaningful to me, I feel like I’m helping people, I often get to dive into topics that force me to think deeply, and I’ve met some interesting folks along the way. That’s really all I want from a career, but I would never have made the leap when I was living paycheck to paycheck.
My wife and I bickered less.
Before our financial turnaround, particularly in the final year or so of our paycheck to paycheck life, my wife and I bickered a lot. Granted, there was a lot on our plate. We were really struggling financially. We had our first child. We were both dealing with some mild career frustrations. Everything wasn’t turning out exactly like we’d hoped a few years before.
It felt like a couple times a week we were disagreeing about something and it usually escalated to the point that we wouldn’t talk to each other for 24 or 48 hours other than to communicate very basic info.
What I found is that after the financial turnaround and after we began to break away from paycheck to paycheck living, our bickering virtually stopped. We rarely disagree these days and when we do, we usually just have a calm conversation about it.
I think what changed is that money issues make you feel like you’re constantly on the edge of losing so much more. I used to feel like we were always a few months away from living out of a car or moving back in with our parents. Today, I don’t feel that way at all – it’s more likely that our parents would move in with us, I think. I used to feel like any minor issue at work could be the first stone that causes everything to come tumbling down. Now, I see a lot of those minor issues as things to be trivially dealt with.
As a result, we simply get along better now than we once did. Our disagreements are far less frequent, and when they do occur, they’re handled in a much more civil fashion. Because of that, we’re both more open to having difficult conversations with each other, and because of that, our bond has deepened over time.
In the end…
Moving from a paycheck to paycheck life to one where you don’t have to worry much about it seems like it’s solely a financial transition, but that financial transition ripples throughout your life in ways that are mostly good, occasionally awkward, and sometimes strange. It opens the doors to different ways of approaching relationships, approaching life goals, handling stress, and dealing with daily life.
Personal finance success is really about much more than the dollars and cents. It’s about finding stability and meaning, and much more.