55% of US Millennials earning $250k+ live paycheque to paycheque

You’ve worked hard. You’ve earned that $70,000 car. You deserve that $3000 purse. You need those $10,000 vacations to recharge.

Don’t you?

It’s fun to spend money, but the dopamine hit quickly fades. To get that feeling, you need to spend more. And more. Some call it ‘retail therapy’. Others call it an addiction.

Sadly, this addiction follows many people as they grow their careers. According to LendingClub, 55% of US millennials earning over $250k live paycheck to paycheck (chart below).

I understand the temptation. Often it’s a matter of convenience, or an antidote to a childhood of poverty. Sometimes it’s driven by ego trying to keep up with peers.

Life costs money, and expenses grow alongside careers – marriage, kids, healthcare. Some lifestyle creep is inevitable as we age. But there’s no reason someone in their 30s earning $250k+ should be living paycheck to paycheck.

Use pay increases to benefit ‘future you’

Imagine yourself 10 or 20 years from today. In one scenario you’ve lived a life of opulence but have little to show and no financial security. In another you’ve lived a more modest lifestyle but have built a war-chest of net assets. In the first scenario you remain dependent on your paycheck, and thus employer. In the second you are free to do as you please.

Trust me, being tied to a paycheck is stressful. Nobody wants that feeling at age 50.

Avoid this by using pay increases to build your personal balance sheet by paying down debts and accumulating assets. Automate this process by increasing bi-weekly mortgage payments and transfers to investment accounts so you don’t have to make a choice and take action every time you get paid.

By doing this, your lifestyle will remain fairly constant as you grow your career but your personal wealth will accumulate. It might not seem fun today, but the financial freedom you gain in the future will feel wonderful!

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