Reasons you might be living paycheck to paycheck

Andrey Popov/stock.adobe.com

Usually, when posed with the question of why some Americans are living paycheck to paycheck, a lot of people assume it’s because those people are living above their means or spending money irresponsibly. Although that might be true for some people, I have found that is not always the case or that living beyond someone’s means is a result of some other cause.

In fact, with veterinarians, associates, and practice owners, there are several probable root causes for why they are having a hard time saving money. The amount people are spending on their lifestyle may be the symptom and not the illness. We have found that sometimes the real problem is underneath; it’s in the way they direct money.

Some people believe that having more income will solve their problems, only to find out that as their income increases, saving money proves consistently difficult.

I’ve had many conversations that start with, “I don’t understand. My income has gone up over 20% in the past year, but I can’t seem to save any more money than I did before. Why is that?” In short, 3 main reasons I see veterinarians living paycheck to paycheck are:

• A lack of clear boundaries on how they spend money daily or weekly
• Imbalanced priorities on how they are paying off their debts
• Not giving attention to their spending habits or how much money they make relative to their spending habits (similar to living beyond their means, but spending more than someone makes is a symptom of the real illness: the mindset or belief that knowing what’s going on with their income and expenses hurts them more than not knowing)

The reality is that when these things are ignored, the effects will be felt. We can run from knowing the consequences of our decisions, but consequences will come nonetheless. So let’s review how to get over these hurdles if you find yourself doing one of or all these things.

First, let’s start with a lack of clear boundaries on how much someone spends daily or weekly.

Human behavior is such that we eat all the food on our plate when we have a meal. If the food is there to consume, my mind is going to reasonably assume that the food is safe to eat.

When a mortgage company approves someone for a house costing $600,000, some people assume it means that’s how much they can afford. After all, the mortgage company wouldn’t approve them for more than they can handle, right?

Because this is the case with human behavior, we find that the easiest way to slow down someone’s spending is to not allow all their income into their checking account. We make sure money is sent to another account that is not commingled with their checking account, which is money meant to cover their lifestyle expenses. This is like not allowing all the food to reach their plate, and money can be out of sight and therefore out of mind. Spending habits change dramatically when people see they have $1000 in their checking account vs the scenario where they have $10,000.

Second, when it comes to people who have an imbalanced approach to paying off debt, veterinarians often throw a lot of their income at their debt without any plan or time frame of when they expect the debt to be gone. The “get it gone immediately” mentality takes their focus off saving money for their “unplanned expenses” and life opportunities that may come up. For example, think of the scenario in which you pay off all your student loans but are newly engaged. Now there is no money available for the wedding. When someone asks me whether they should save money or pay off debt, my answer is always the same: Find balance and create a reasonable plan that builds control.

Third, ignoring money has consequences. Sometimes it’s in the form of stress from the cost of an unexpected flat tire or in the life-altering realization that a lack of planning puts us in a position where our financial goals become impossibilities. If you find yourself ignoring these things and steering yourself away from truly understanding how you’re managing your money or what path you’re on, please show yourself some compassion. Realize that no one learns this stuff without intention. You’re not alone if you feel discouraged or overwhelmed. Take one step at a time.

DISCLAIMER: Securities products and advisory services offered through Park Avenue Securities LLC (PAS), member FINRA, SIPC. OSJ: 4200 West Cypress Street, Suite 700, Tampa, FL 33607, 813-289-3632. PAS is a wholly owned subsidiary of The Guardian Life Insurance Company of America (Guardian), New York, NY. The individuals associated with Florida Veterinary Advisors do not maintain specialized licenses or qualifications for the financial services provided to veterinary professionals. Florida Veterinary Advisors is not registered in any state or with the U.S. Securities and Exchange Commission as a Registered Investment Advisor. Florida Veterinary Advisors is not an affiliate or subsidiary of PAS or Guardian. 2024-179488 Exp 8/26