The Math Behind Life as an Average American

Why people live paycheck to paycheck.

Lindy Gullett, PhD
Apr 7, 2020 · 5 min read

You might be like me. I never worry about how to pay for tonight’s dinner. If I got a $1,200 check, I’d probably buy something cool or stash the money away for a rainy day. Not being able to pay rent, having to move back home with mom and dad. That sounds embarrassing, nay horrifying. But I never worry about whether I will have a roof over my head and food in my belly.

If you are like me, you are lucky. We are lucky. Growing up, we never had to pretend that we “forgot” our lunch. We didn’t have to work a full-time job during college. We don’t have credit card debt constantly weighing on our mind.

If the coronavirus has any silver linings, one of them is bringing the experience of normal Americans into focus. More of us are realizing that there are two groups of Americans — people with a savings that acts as their safety net and people who live paycheck to paycheck.

Sixty-nine percent of Americans have less than $1,000 in their savings account.

Photo by StellrWeb on Unsplash

Imagine your 18 year old self. But let’s add a twist to your life story. In this alternate universe, you spent your whole life hungry. Literally hungry. If you ate too much, there wouldn’t be enough food for your little brother. If you ate too little, you’d regret it the next day when you looked in the empty fridge. All of your clothing was used, hand-me-downs.

When you turn 18, you get a letter, and you are pre-approved for a credit card!

You have zero dollars in your bank account. In fact, you’ve never even had a bank account. But you can already imagine it. You’ll be able to buy groceries, maybe even go out to eat. You’ll be able to buy textbooks, maybe even move into your own place (with roommates). It’s a no-brainer. Let’s get a credit card.

You hit your credit limit, but don’t worry, you can get another credit card. Then two credit cards becomes three credit cards. By the time you hit your early 20s, you have thousands of dollars in credit card debt. You start to realize that all of that credit card debt is a problem, and you commit yourself to paying it off.

The average 25 year old has $2,675 in credit card debt.

So how are you going to pay off that debt?

Let’s assume that you have a full-time job at $15/hour. You bring home $2,229 per month after taxes.

Did you know that $15 an hour is over double the Federal Minimum Wage of $7.25 per hour? If you make $7.25 per hour, you only bring home $1,138 per month after taxes. Let’s be generous, though. You make $15 an hour. How do you spend that $2,229 each month?

Adding Up Basic Expenses

You spend $850 per month on rent and utilities. If you live in California, you are pretty freaking jazzed cause that is as cheap as it gets.

You know how to budget and only spend $15 per day on groceries and other necessities. That’s $450 per month.

You pay $114 per month for your cellphone so that you can stay in touch with family, friends, and work.

You cover the typical 18% of your health insurance premium at $103 per month, and you thank your lucky stars that your employer covers the other 82%.

You, like most Americans who attended college, have over $30,000 in student loan debt. You put $200 per month toward paying off that debt.

Cars are expensive, but you need your car to get to work. You found the cheapest car that you could and went with minimum legal insurance coverage. All in, your car costs you $295 per month.

And you’ve still got that credit card debt to pay off. Let’s say that you have $3,000 of debt that you are hoping to pay off in 3 years. That’s another $110 per month.

So what’s the total? That’s $2,122 per month on basic monthly expenses.

Congratulations! You have $107 a month left from your paycheck to add to your savings. Just make sure that you don’t have to cover the deductible for a doctor’s appointment, buy clothing, go out on a date, get your hair cut, or get a parking ticket. And if you end up in the emergency room, look forward to a bill that will take you years to pay off.

This budget doesn’t even account for dependents. Have kids? Have a disabled parent or sibling who you care for? You’ll need to somehow make time and money for them too.

Over 40% of Americans make less than $15 per hour. And almost 80% of Americans live paycheck to paycheck. So what happens when that paycheck suddenly stops?

You stop paying rent. You stop paying credit card bills. You can’t put food on the table. And you definitely don’t go to the doctor when you get a sore throat, a dry cough, a fever, and a tight chest.

Or let’s say that your paycheck doesn’t stop. Instead, your employer tells you that you are essential. If you stop going to work, you’ll be fired. You look at your empty pantry. You think about your thousands of dollars of student debt. You ignore that pesky sore throat. You go into work.

That’s why unemployment benefits are getting a boost. That’s why Congress passed legislation that gives most Americans checks for $1,200. (And, someday, people will even get that money.) And those unemployment benefits, that $1,200 check still really aren’t enough.

I hope that when this pandemic eventually ends, we remember how grateful we are for grocery workers, for delivery drivers, for warehouse workers, for teachers. I hope that we enact lasting change that cares for everyone’s basic needs.

I don’t want to live in an America that forces hardworking, thoughtful, kind people to live paycheck to paycheck. I want to live in an America that supports and empowers its people.

I’ve always had friends who worried about paying rent; who struggle with debt; who have an automatic, physical, defensive reaction when I mindlessly eat something off their plate. (Sorry to all of the friends whose plates I mindlessly ate from.) But having diverse friends doesn’t mean that I know what it’s like to experience life as a normal American. If you think that I got something wrong or missed something important, I want to know. Email me at

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Lindy Gullett, PhD

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PhD in Social Psychology from NYU. Here to tell stories about people, their lives, and their communities.

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