With recession looking more probable by the day, consumers who are already financially strapped are looking at ways of managing money when there’s less of it, and everything costs considerably more than it did even six months ago.
We see this in “New Reality Check: The Paycheck-To-Paycheck Report – Financial Distress Factors Edition,” a PYMNTS and LendingClub collaboration, a survey of over 3,700 U.S. consumers and part of a series tracking the paycheck-to-paycheck trend that’s more widespread than anyone believed, even affecting nearly one in three consumers earning $250,000 or more annually.
Our ongoing research shows that high earnings and savings cushions can help keep people out of paycheck-to-paycheck ranks, but these are no guarantee against that way of living.
Per the latest study, “More than half of the U.S. population — an estimated 150 million adults — currently live paycheck to paycheck, making it the most common financial lifestyle in the United States. Though lower incomes generally correlate with living paycheck to paycheck, 30% of consumers who earn $250,000 or more annually live paycheck to paycheck.”
It’s not all doom and gloom, at least not for everyone. While paycheck-to-paycheck living may be a common condition, some manage it with far less difficulty than others.
PYMNTS research found that “paycheck-to-paycheck consumers fall into two categories: those who can pay their monthly bills easily and those who struggle to do so. In May 2022, 39% of consumers were living paycheck to paycheck without difficulties paying monthly bills — an increase from 33% in May 2021. Meanwhile, the share of those living paycheck to paycheck with issues paying their bills dropped slightly, from 21% in May 2021 to 19% in May 2022.”
During the pandemic era, paycheck-to-paycheck living grew apace with the financial difficulties of lockdowns adding to the regular stressors of life that all people contend with.
Finding that 56% of paycheck-to-paycheck consumers with issues paying their bills and 35% of paycheck-to-paycheck consumers without difficulties paying their bills experienced life-altering events in the past three years, the study states, “Job loss and income-related disruptions are the most common financially stressful situation, for instance, with 16% of respondents experiencing this in the last three years. Among paycheck-to-paycheck consumers with issues paying their bills, 30% experienced a job loss and income-related disruption in the last three years compared to 17% of paycheck-to-paycheck consumers without difficulties and 10% of those not living paycheck to paycheck.”