Breaking the paycheck to paycheck cycle

Published: Sep. 8, 2021 at 1:28 PM EDT
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RICHMOND, Va. (WWBT) - 54 percent of Americans are living paycheck to paycheck. That’s 125 million people according to a study by LendingClub Bank.

If you are living that paycheck to paycheck cycle, meaning the day you get paid, all of your money goes to bills, it’s important to develop a plan to get out of it.

Cherry Dale, a financial coach with the Virginia Credit Union, says start with your taxes. If you are getting a big refund at the end of each year, it might be good to adjust your allowances.

Dale says instead of claiming zero, claim two or three if you have two or three children. It means you’ll get a lower refund at the end of the year.

“You will get more each month of your paycheck. So, that can provide even a $50 or $100 cushion for you. [It] can be very beneficial ... if you are living pay check to pay check,” said Dale.

She goes on to say that any kind of bonus money, a raise or that $300 you may get per child this fall and winter, you want to make a plan for it. She says instead of using a credit card, maybe that money is for your child’s school trips and winter clothing.

Dale also says to think about an extra seasonal job for a few months to help you get ahead, pay off debt and get out of the paycheck cycle.

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