Paycheck-to-Paycheck Consumers Rethink What’s Essential

Over 60% of American are now living paycheck to paycheck, and close to one-quarter of U.S. consumers live paycheck to paycheck and struggle to meet monthly expenses. That harsh reality shows up in the products they buy — or don’t — and related financial behaviors.

Exploring this “new reality” since 2021, in the study “New Reality Check: The Paycheck-To-Paycheck Report: Inflation Edition,” a PYMNTS and LendingClub collaboration, we asked nearly 3,500 U.S. consumers how inflation and weakened spending power are changing buying habits.

As the study observes, “the share of consumers living paycheck to paycheck with issues paying their bills has dropped 7 percentage points [since Sept. 2021]. Many have moved to what now may constitute a stable lifestyle: living paycheck to paycheck without difficulty paying bills.”

Moreover, their shopping choices reflect the new reality, as we see in the data.

Get your copy: New Reality Check: The Paycheck-To-Paycheck Report: Inflation Edition

The paycheck-to-paycheck lifestyle worsened by intense inflation is causing consumers to redefine “essential” in everything from subscriptions to shopping bargain brands.

“Consumers of all financial lifestyles purchase groceries first and foremost. Among paycheck-to-paycheck consumers without issues paying monthly bills, 89% purchased groceries in the last 30 days, as did 85% of paycheck-to-paycheck consumers with issues paying monthly bills,” per the study. “While these groups are quite different, they purchased health-related products at similar rates: 50% of both groups purchased health-related products in the last 30 days.”

Nothing gets left unassessed in this climate, including apparel, health and beauty. The data shows that just 46% of consumers living paycheck to paycheck with issues paying bills purchased clothing and accessories in the prior 30 days, “and 36% purchased beauty or cosmetics products. For paycheck-to-paycheck consumers without issues paying bills, those shares are 59% and 42%, respectively.”

Consumers who do not live paycheck to paycheck are 30% more likely to have purchased clothing and accessories than those living paycheck to paycheck, we found.

Read it: New Reality Check: The Paycheck-To-Paycheck Report: Inflation Edition