Although most Americans only get paid every other week, the average American spends more than one-third of their paycheck within the first 12 hours of receiving it; by 48 hours, nearly 48% of the average paycheck is already spent, according to a new survey from Talker Research and Earnin.
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Here’s where that money is going — plus, tips to make your paycheck last longer.
Where Americans Spend Their Paychecks First
Spending 48% of your paycheck in 48 hours may seem irresponsible, but most Americans are using that money to cover essentials. According to the survey, more than half of Americans (52%) cover groceries or necessities as soon as they receive their paychecks.
Another large portion (48%) pays bills due within the week, while 42% use it to cover large expenses like housing or credit cards. About 1 in 3 (32%) use the money to cover smaller bills, like utilities or subscriptions.
“For the most part, bills should be paid when due; not early and not late,” said Michael Sullivan, a personal finance consultant with Take Charge America. “Rent, utilities, car payments and most monthly bills should be on autopay and scheduled to be paid on the day they are due, or one day early for those who worry about tech failures.
“Credit card bills might be paid in advance for a very slight advantage on credit scores,” he continued, “and home mortgages certainly could be paid a full month in advance, if possible, to save on interest costs.”
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Overspending After Payday: Who’s Most at Risk?
While many Americans put their paychecks toward essentials right away, some also admit to overspending when payday hits. About one-third of all respondents (34%) admit they overspend in the days following payday. Younger Americans are more likely to overspend right away, with 52% of Gen Z and 45% of millennials admitting that they do.
Gen Z is most likely to blame societal pressure for this behavior, with 22% feeling compelled to spend as soon as money lands in their account, and 18% spending to “keep up” with friends who earn more.
Why Planning Ahead Matters
Perhaps one of the reasons so many Americans spend a significant amount of their paychecks right away is that they don’t budget for what to do with it in advance. The survey found that only 38% of millennials map out their spending in advance of getting paid.
“Consumers should have a monthly budget that assumes each paycheck goes into the bank and payments are made when due,” Sullivan said. “Most consumers cannot pay all their monthly bills due on the first of the month from one paycheck. They need to plan for a monthly income to cover all expenses for the month. Payday should not be a great event.”
Expert Tips To Make Your Paycheck Last
Ideally, your paycheck will easily stretch between pay periods — but this is easier said than done. D’Andre Clayton, co-founder of Clayton Financial Solutions in Greensboro, North Carolina, shared a few tips for making your paycheck last:
- Change your thinking around money. “If you don’t, then your behavior won’t ever change.” Instead of seeing earning and spending as a sprint, slow it down so you’re not constantly having to play catch-up.
- Wait 24 hours before spending any of your paycheck. “You have to change the adrenaline of spending money into an intentional waiting period. Wait 24 hours after receiving money [to spend it] because it’s likely the dopamine will disappear in 24 to 48 hours.”
- Separate money into separate accounts, based on what you use them for. Ideally, you will funnel a portion of your paycheck into your checking account to cover essential expenses, and another into savings or investments.
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This article originally appeared on GOBankingRates.com: Nearly Half of Americans’ Paychecks Are Gone in 48 Hours — Here’s Why
