More than 1 in 4 workers earning $200,000 or more now say they live paycheck to paycheck.  So even rich people struggle to save, and professionals offer 3 solutions

As many as 93% of rural and 92% of urban consumers say they are noticing higher prices due to rising inflation, according to a report.

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Making a bank doesn’t mean you have loot saved in the bank. About 45% of those making more than $100,000 say they live paycheck to paycheck; 47% of those making between $150,000 and $200,000 a year; and 28% of those making over $200,000, new report from PYMNTS.com found. What’s more, a 2022 study from LendingClub revealed that 30% of those earning $250,000 or more live paycheck to paycheck. And that’s too bad, since many savings accounts now pay more than they did in the last decade — see the highest rates you can get on a savings account now here.

“The combination of taxes and inflation leaves purchasing power low,” says MaxMyInterest CEO Gary Zimmerman, who notes that a $100K salary isn’t what it used to be. So how do these high earners start spending less and saving more? We asked the pros.

One way to “save more is to add discipline.”

“To get out of the paycheck-to-paycheck cycle, you have to either earn more or spend less β€” and preferably both,” Zimmerman says, adding that while that may seem unrealistic in today’s economy, one way to get back control is to ” “save more is to add discipline.”

how? “Automatically deduct a portion of your biweekly paycheck to go directly into a savings account,” says Zimmerman. β€œOr, better yet, choose to save as much of your income as you can by funneling it into a 401(k) plan that’s tax-advantaged and often matched by your employer. If you don’t see the funds first, you won’t miss them and you certainly won’t spend them.”

See the highest rates you can get on a savings account now here.

This is supported by research: recent study by professors at Harvard, Yale, Brigham Young, and William & Mary found that people who automatically enrolled in a company retirement plan still had similar levels of debt as those who chose to save on their own. “We found that there was no difference between the two groups in how much credit card borrowing they did,” said Yale finance professor James Choi, who helped write the report. “There was no difference in credit ratings and their measures of financial distress.”

Review your spending habits and reduce debt

Try to pay off expensive debt as quickly as possible and make big changes to important things like rent, food, travel and more if you can. In particular, NerdWallet data analyst Elizabeth Renter suggests looking for ways to reduce credit card debt. “When you carry a balance from month to month, you penalize yourself unnecessarily with interest and interest rates go up,” says Renter. “Consider opening a balance transfer credit card to get the balance paid off during an initial interest-free period.”

Renter adds that you should also try to limit luxuries like streaming accounts, name-brand foods, and sit-down restaurant meals.

See the highest rates you can get on a savings account now here.

Consider additional income through the “gig economy”

Even if you’re making what looks like a lot on paper, living paycheck to paycheck can be helpful in boosting your income. “Increasing income has become easier now with the gig economy we’re in,” says Vanessa N. Martinez, founder and CEO of Em-Powered Network, a financial counseling and mentoring program for women. For a professional, this might mean taking on the role of some kind of consultant.

Regardless of whether you choose to pursue any of the above strategies, it’s clear that all consumers, including high-income earners, are under pressure. As many as 93% of rural and 92% of urban consumers say they are noticing higher prices due to rising inflation, according to the PYMNTS.com report. In response, the authors say that people of almost all socioeconomic classes will need to take some measures to adjust. “As inflation is expected to continue, it is likely to further squeeze consumers from all financial walks of life and time will tell how well they continue to adapt.”

Any advice, recommendations or rankings expressed in this article are MarketWatch Picks and have not been reviewed or endorsed by our trading partners.

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