It’s Friday, which can only mean one thing: payday.
It runs through the heads of workers all over the world. Whether on a weekly or biweekly basis, Friday (usually) is the day where your hard work in the office comes in the form of either a physical check or directly into your bank account. But just because you are getting a paycheck doesn’t mean life is easy. For most workers, the pleasures of your weekly wage are not enjoyed in the ways you want. Vacations are constantly being placed on hold due to mounting debt, whether from necessities like housing to monthly credit card debt. And even if you’re lucky enough to have things straightened out, just because your paycheck is big and fat doesn’t necessarily mean you’re able to enjoy your life as you intended.
In short, your paycheck says a lot about your lifestyle. Here’s why.
Living paycheck to paycheck?
The goal has always been the land the job you dreamed of. That follows with other steps of adulthood such as finding the right partner, progressing into marriage, which comes with other things like owning a house, having kids, and pay for expenses that every adult has to face at some point or another. But sometimes, even having a job isn’t going to make life go the way it’s intended, and just because you have a job doesn’t mean you have a good salary.
That’s the case for many Americans. Despite the US being the twelfth richest nation in the world, nearly eight in 10 workers live paycheck to paycheck, according to research conducted by CareerBuilder in 2017. Living paycheck to paycheck also means that workers are not able to meet other needs, such as setting aside funds for savings, as more than 1 in 4 workers cannot put away any savings each month.
Some of the other perils of living paycheck to paycheck include mounting debt. With salaries going straight toward bills, nearly three in four workers said they are in debt, with more than half believing they always will be stuck in the negative.
For workers who earn more than $100,000, which is considered a healthy salary, living paycheck to paycheck is a reality, too. Eighteen percent of workers earning north of $100,000 recently surveyed by advisory firm Wills Towers Watson admitted living week-to-week.
Less than half of respondents said they were satisfied with their current financial situation. By not earning enough to meet the demands of That creates financial stress, which can negatively impact workers in other ways, according to Willis Towers Watson senior economist Steve Nyce.
“Financial health is not just about income. The impact of financial problems on employees’ health and stress, even for those who aren’t living paycheck to paycheck, is unmistakable,” Nyce said in a press release. “Many employees are struggling with their financial situation even as the job market and economic conditions improve. Some employees struggle to pay for their basic needs, including health care, while others are falling behind in saving for retirement. No matter the source, financial stress has a negative impact on their lives, underscored by hampering their ability to perform effectively at work.”
While there’s some optimism for those living by the week, many aren’t able to live the life they want to live, which is harming their lifestyle. If you’re living paycheck to paycheck, there are strategic measures you can take to help balance your books and give yourself more breathing space. Financial coach Maggie Germano suggested these five keys:
- Automate your savings: Decide how much you want to save each month and set up direct deposit from your paycheck.
- Increase your retirement contribution: Pretty simple: by increasing your retirement fund, you’re saving money you’d be spending elsewhere.
- Keep an eye on your daily spending: Create a budget and follow it.
- Make strategic decisions on expenses: Just because you received a big pay raise doesn’t mean you need a fancy new car to celebrate. Figure out what you really need in your life and whether it’s worth upgrading.
- Take care of yourself.
How your voice costs you
As crazy as it sounds, regional accents can hurt your potential earnings due to bias in the workplace.
Recently, Quartz retold the story about why Stephen Colbert ditched his Southern accent in a 60 Minutes interview in 2006. Colbert, who grew up in South Carolina, said he decided as a child to stray away from his roots because he didn’t want to seem “stupid.”
“At a very young age, I decided I was not gonna have a Southern accent,” Colbert said in 2006. “When I was a kid watching TV, if you wanted to use a shorthand that someone was stupid, you gave the character a Southern accent. And that’s not true. Southern people are not stupid. But I didn’t wanna seem stupid. I wanted to seem smart.”
Colbert’s worries were valid. A working paper entitled “The Wage Penalty of Reginal Accents” published by the National Bureau of Economic Research found that German workers with “distinctive regional accents” are penalized financially based on their accents, with those who have particular accents earning around 20% less yearly that German workers who have a normal accent.
The paper, which is authored by the University of Chicago professor Jeffrey Grogger and LMU Munich professors Joachim Winter and Andreas Steinmayr, collected data based on workers’ speech in Germany, which was purposely chosen considering the country has many different regional dialects. On an hourly rate, German workers without a distinct regional accent earned about $19 hourly, while those that had dialects only made about $15-per-hour. Over a year, that amounts to more than an $8,000 difference.
Like Colbert, the authors of the study said that the cost of an accent increases as you get older. An accent can be ingrained into anyone depending on how they were raised during childhood, with education and schooling playing a critical role as well. As workers, those with noticeable accents were not employed in lucrative careers.
“Workers with regional accents sort away from occupations that involve extensive interpersonal interactions,” the study said. “By doing so, they avoid the large negative wage penalties that are associated with those occupations, suffering the smaller wage penalties that arise in less interactive lines of work. We cannot say whether this sorting arises from consumer/coworker discrimination or from a model of task-trading in which regional speech reduces productivity for reasons other than consumer or coworker prejudice.”
Grogger found similar patterns in a study published in the Journal of Human Resources, which focused on wage patterns of African Americans. Black American workers who spoke mainstream of Standard American English earned more than those who had regional speech patterns. Similarly, wage patterns were impacted by 20%.
Where paychecks affect us elsewhere
Money is always an excuse to not do something. Putting off travel plans? Been there. Not able to afford something that you’ve had your eye on for months? You betcha.
For vacations, nearly 50 percent of Americans aren’t going away due to not having to enjoy life away from home, according to Allianz Global’s annual Vacation Confidence Index survey. In addition, 19% of respondents said they didn’t want to spend money on travel.
A separate recent study also found that traditional life milestones were being pushed aside due to a lack of financial stability. Things like saving for retirement (54%), getting married (53%), and even getting engaged (38%) were being delayed, according to the study.
How to read your paycheck
Ever wonder what all that nonsense at the top of your paycheck means? If you’re still someone who receives an actual statement rather than opting for direct deposit, you might want to make sure you’re being paid what you deserve.
GoBankingRates compiled a helpful guide to understand what everything on your pay stub means. Here’s a breakdown of what appears on your paystub and what it means:
- Employer/Company Address: The name and address of your employer
- Employee No.: Your unique ID number at your place of employment used by payroll managers instead of your full name
- Employee Name: Your name
- Social Security No.: Your Social Security number
- Period Beg.: Date the pay period began; “Beg.” stands for “beginning”
- Period Ends: Date the pay period ended
- Check Date: Date the check was issued
- Earnings: The type of income you received, which can include regular pay, overtime pay or other types of wages
- Hours: The number of hours worked during the pay period if you are an hourly employee — left blank for salaried employees
- Rate: The hourly rate and number of hours worked if you’re an hourly employee, as well as any bonuses or commissions for the pay period
- Current Amount: Amount you’ve earned during the pay period before withholding and deductions
- Withholding/Deductions: Federal and state taxes taken from your gross earnings for inclusion on your W-2, including Social Security, Medicare and W-2 withholding tax
- Current Amount: An itemized list of withholdings and deductions for the pay period
- Year to Date: The period starting from the beginning of the year to the present; the figure represents your itemized deductions during that time period
- Current Amount: Your gross earnings during the pay period before any withholding and deductions have been taken out
- Current Deductions: Amount of deductions — possibly including 401k or other retirement savings plan contributions — taken out during the pay period
- Net Pay: Amount of take-home pay, or your pay after tax, after all deductions have been taken out
- YTD Earnings: Amount of total earnings for the year to date, from the first of the calendar year up to and including the pay stub’s pay period
- YTD Deductions: Amount of your total deductions from the first of the calendar year up to and including the pay stub’s pay period
- YTD Net Pay: Amount of total net pay earnings from the first of the calendar year up to and including the pay stub’s pay period
- Check Number: The check number for the specific payment