Are you really living paycheck to paycheck?

I had a conversation with someone recently about living paycheck to paycheck. I have scraped loose change together to get dinner at 7-11 in the past so I understand that way of life. Living day to day, working hard, and having no extra cash available is very stressful. Some industries pay every 30-45 days, so budgeting for that is difficult. It is tough to live hand to mouth whether someone is being paid too little to live on or being paid too sporadically. For most people, being paid is the incentive for showing up to work, of course there are exceptions. But when it comes down to eating versus not eating, the amount of money someone makes and the frequency of being paid matters.

The conversation I had which sparked today’s column, took a different turn when I felt empathy and began asking questions. That is when I learned that living paycheck to paycheck means different things to different people. This gentleman was frustrated that he had no savings and was working hard. So, I asked about his RRSPs, which it turns out he maxes out every year and his company matches his contributions. To him that was just part of his monthly expenses, and did not constitute savings. To me that is what RRSPs are, savings for later in life, a nest egg, and the company matching is a large sum to be considered in his annual compensation. I asked him about his home, which he owns, but of course has a mortgage. I say that owning a home is a privilege, and shows that this person is not living paycheck to paycheck. A mortgage is necessary to own the asset, unless you are extremely wealthy.

I asked this man about other debt, specifically, if he had any credit card debt. He said he doesn’t like to use credit cards, because he doesn’t want to have debt. And if he does use them, he’ll always pay them off at the end of the month. Paycheck to paycheck to me means credit cards are maxed, and certainly no home ownership with substantial equity! I asked if he had any past student loans, which are tough to pay back? The answer was no. I then found out that he had just bought a new car, and was feeling the pinch of paying a down payment on that. Oh, and he’d just booked a holiday with his family, so he felt he had no money left over after paying it off. Personally, that is not my idea of living paycheck to paycheck, that is what I call living!

I say people who are really living paycheck to paycheck cannot afford a house, a car, a trip, and RRSPs. But, I guess he felt he was not making enough money to meet his financial goals. I say the conversation should have been about that, and not comparing himself to those who really do search for spare change to put food on the table.