More or less, 61% of all Americans are living a paycheck to paycheck life, according to Lending Club Survey. This means that millions of people in the world’s biggest economy are stuck in bad debt, don’t have their financial matters managed, and they cannot even think of achieving financial independence!

Do you ever wonder why so many people in the world earn six-figure salaries but still barely make ends meet? Are they just being irresponsible, or are there other factors at play here?

You might assume that having a high salary automatically means you have enough money to live a comfortable life. However, it doesn’t matter how much you earn if you don’t manage your spending and keep track of your finances. Even with a six-figure income, some people cannot save enough money or stay out of bad debt.

The following are some common reasons why even high-earning individuals end up living paycheck to paycheck:

You’re not tracking your spending

Tracking your spending is essential if you want to save money and avoid living paycheck to paycheck. When you have a budget, you know exactly how much money you are putting towards each expense category each month.

When you don’t have a budget, you spend all of your money in random places without a clue where it’s going. And that’s not only a massive waste of your hard-earned money, but it also means you’re not taking advantage of the savings opportunities that are available to you.

If you don’t track your spending, you won’t know if you’re overspending. You may think that some of your expenses are normal and that you can afford them when they’re not.

You have debt you’re struggling to pay off

Many people get into debt thinking they will get out of it faster if they pay it back as quickly as possible. It might seem logical to do this because you don’t want to be paying anything for 30 years. But that’s not the case.

If you have debt you’re struggling to pay off; you are wasting money. If you don’t pay off your debt as soon as possible, you will have a more challenging time saving for the future. And that’s something you need to do immediately because if you don’t, you will end up living paycheck to paycheck for the rest of your life. At the very least, you should have a firm plan with timeframe to pay off your non-essential debt.

You don’t have a solid grasp on your finances

A solid grasp of your finances is key to having a good handle on your money. If this is not the case, you are not tracking your spending, you have debt you’re struggling to pay off, you don’t have a budget, and you feel financially insecure and spend unnecessarily to avoid it.

That’s a lot of factors that are likely contributing to why you’re living paycheck to paycheck. To help you with this, we recommend connecting with a financial consultant They can help you get a solid grasp on your finances and help you get out of debt, and save for the future.

There aren’t enough cash-saving habits forming yet

Some people are born with the desire and ability to save money. And while it’s impossible to know exactly what someone’s financial situation is like and how much effort they put into managing their money, we can get a glimpse by observing their spending habits.

It’s important to remember that the best time to start building cash-saving habits is now before you’re in a situation where you have to save. When that happens, it may be too late to start.

Cash-saving habits are like muscles. You have to exercise them consistently for them to grow. And the best way to do that is by setting small goals and accomplishing them one by one.

Not diversifying your investments

Diversifying your investments means that you’re spreading out the risk by investing in many different types of asset classes. This helps reduce the risk of losing everything if one investment goes sour. Real estate is an excellent example of an asset class that can be used to diversify a portfolio.

Another way to diversify your investments is by investing in a mix of growth and value stocks. Growth stocks are companies that show high earnings growth over time. Value stocks are those that have low price-to-earnings ratios.

However, diversification doesn’t have to be limited to investments; it can also apply to physical possessions such as real estate or personal belongings like art collections or jewelry collections. Any asset that could potentially gain or lose value can be considered for diversification purposes.

Not learning the basics of financial accounting

The basics of financial accounting are the foundations of all business decisions. The more you know about financial accounting, the better your decisions as a business owner or manager. Whether working for someone or running a business, you must learn the essential basics of financial accounting. You should know how financial and tax laws apply to you so that you can make smart business decisions.

The first thing to know about financial accounting is that it is a set of guidelines that help you understand how money moves through your business. Using these guidelines properly will help you manage your company more efficiently, which can mean making more money for yourself or your employer.

What’s next?

This article hopefully gave you some insight into why some people earn six-figure income but still barely make ends meet. A high salary doesn’t ensure you have enough money to live a comfortable life. Knowing how your money is being spent and what opportunities there are to save money is essential. You can work towards a better financial situation when you know these things.

Living paycheck to paycheck can be and feel like a constant battle. The good news is that you can make a change. And with a little bit of effort, you can improve your financial situation.

Bernd Financial provides the best financial consulting solutions for business and personal cash flow and debt management. We are a full-service financial consulting firm that offers our clients a wide range of services.

If you’re looking for expert analysis of your present finances, productive counsel to create or revise plans to accomplish your financial goals, and candid assessments along the way to your financial success, Bernd Financial Group can help. Our experts will meet with you to discuss your goals and objectives. Then we’ll walk you through how we can help you achieve those goals by providing unbiased advice and tailored recommendations for your needs.  Schedule your free initial consultation appointment today.