by Edward Jones, IMDiversity Featured Employer

This Edition: “How to Stop Living Paycheck to Paycheck”

February 2004 – If you want a good visual of how organized or disorganized your financial life is, take a look at your wallet.   Is your wallet neat and organized with specific compartments for each credit or other card?  Or is your wallet in no particular order and crammed with store and ATM receipts? Around tax time, do you find yourself sorting through shoeboxes? How you keep your wallet and financial papers are usually good indications of how you manage or mismanage money.

Another and more serious form of financial mismanagement is living paycheck to paycheck. A 2001 study, conducted by the Consumer Federation of America and funded by the Bank of America Foundation, revealed that 53 percent of households live “sometimes, most of the time, or always live from paycheck to paycheck.”  The study also revealed that 60 percent of households do not believe they are “saving enough for the future.”  This saving gap is even greater for African Americans and Hispanic Americans who often have less access to higher paying jobs.


Take a Look at Your Money Management Heritage

While there are many American households of all races,which live a hand-to-mouth existence due to lower incomes, there also are households of all races with moderate to solidly middle-class incomes, which also are struggling because they have either failed to create a budget or never learned how.  How a person manages or mismanages money is often an indication of what they learned during childhood from parents or other responsible adults.

“I grew up in a middle-class, African American family.  My parents did everything they could to ensure that my brother and I had all the things that they were denied,” said Kyla Thomason,** a young professional living in the St. Louis metropolitan area. “Still, even as a child, I could feel the tension and was acutely aware that my parents were overextended and that we were living well above our means. Now, I’m doing the same thing and there are many times that I wish I had chosen the less expensive roof over my head or the less flashy and certainly less expensive car.”


Create a Budget

While some learned their good or bad money habits from others, others may have a hard time creating a budget because want often outweighs need, especially in our super commercial American society.  In other words, we may want that new, very cool HD-enhanced plasma television, but do we really need it? Or, we may want to take a vacation in the Caribbean, but are there other more important concerns that could use that money?

“I know if I had budgeted my money better and not given in to what I wanted, I would not have accumulated so much unnecessary debt,” said Thomason.  “I have experienced hard lessons from poor money management, and for my birthday rather than give myself something material, I have decided to pay off a significant amount of debt.”

Creating a budget is really not as difficult as it may seem. The first step to creating a budget is creating a worksheet with one column listing each type of debt or expense and a second column with space to write in monthly payments.  List your most expensive or necessity debts such as rent or mortgage and utilities first, and then work your way down the list from food to car payment and from clothing to entertainment and so on.

Once you have created a sheet that you believe will help you to keep easy track of your expenses, make a copy for each month of the year and place the copies in a three-ring binder.  You can always find it for quick entries and reference.

Or, if would prefer, you could have a professional or Edward Jones investment representative help you to prioritize your bills and find ways to help you get the most out of your paycheck.


Get The Most Out of Your Paycheck

“Ideally when you receive your paycheck, your money should not only be going to pay bills and other nonessential expenses, but to investing for your long-term financial future,” said Pierre Johnson, an investment representative based in Austin, Texas.

“With clients we can look at their entire financial picture, determine a budget, and see if we can find money for saving in an account such as money markets, certificates of deposits or IRAs, both traditional and Roth,” said Johnson.

An investment representative may also consider enrolling their client in an Edward Jones CFO or Complete Financial Organization program. A CFO enhances investments that may be scattered in different accounts and consolidates them into one, more effective system of management.

“In other words, we can take one automatic payment and distribute it into several savings vehicles,” said Johnson. “The Edward Jones Complete Financial Organization program helps put your financial picture into focus.”

Edward Jones is around the corner and in your neighborhood to serve investors like you To find an Edward Jones investment representative in your area, visit

(**Some names appearing in this article have been changed to protect their privacy.)


View articles from previous editions in the complete Edward Jones Diversity Series Archives

Featured Employer Edward Jones is a Key Sponsor of is committed to presenting diverse points of view. However, the viewpoint expressed in this article is the opinion of the author and is not necessarily the viewpoint of the owners or employees at IMD