Age and Income Miss the Real Divide in Financial Health

Two consumers can share a generation, an income bracket and many of the same expenses while occupying markedly different financial positions.

That is one of the central findings in the July edition of PYMNTS Intelligence’s “The American Paycheck.” The report finds that financial pressure extends across generations and well into six-figure incomes, while the way consumers manage their money often separates those with room to maneuver from those under persistent strain.

Two-thirds of U.S. consumers lived paycheck to paycheck in January, including 23.8% who struggled to pay bills and 42.7% who did so without difficulty. That combined share has remained between 65% and 71% across the series.

Income offers no clean dividing line. Just over six in 10 consumers earning $100,000 to $150,000 annually live paycheck to paycheck, as do 46% earning more than $150,000.

The circumstances behind those figures differ considerably. Among all paycheck-to-paycheck consumers, 42.4% describe their situation as a necessity, 29.6% as a choice and 28% as some combination of the two. Among those earning more than $150,000 who live paycheck to paycheck, 48.6% say they do so by choice and 21% by necessity.

Bridge millennials have the highest paycheck-to-paycheck rate at 73.3%, while Generation Z registered the largest year-over-year increase, rising 3.8 percentage points to 72.7%.

Those generational averages, however, obscure substantial differences among people of similar ages.

The Bigger Divide Is Within Generations

The report divides consumers into three groups based on their financial behavior. Reactive consumers, representing 34% of adults, reduced spending and savings and relied heavily on cutting back and avoiding purchases. Proactive consumers, at 21%, sought additional income, negotiated bills and used installment products more frequently. Balanced consumers, representing 45%, maintained or increased spending while saving more than the other groups.

That behavioral segmentation produces a much wider spread than generation alone.

Across generations, the share of consumers facing daily-living pressure ranges by only 5 percentage points, from 49% among Gen X consumers to 54% among boomers. Within the boomer population, however, the spread reaches 31 points: 38% of balanced boomers face daily-living pressure compared with 69% of reactive boomers.

The specific pressure points also change within generations. Among boomers, 39% of reactive consumers cite clothing and personal care as a challenge, versus 20% of balanced consumers. For Gen X, 81% of reactive consumers cite utilities compared with 57% of balanced consumers. Among millennials, credit card payments are cited by 75% of reactive consumers and 60% of balanced consumers. For Gen Z, 73% of reactive consumers flag building an emergency fund, compared with 47% of balanced consumers.

The implications extend beyond consumer classification. Banks, lenders and payments providers traditionally use income, age and other demographic measures to understand customers and assess financial capacity. The PYMNTS Intelligence findings suggest those measures can miss substantial differences among people who appear similar on paper.

Financial behavior adds another layer: whether consumers are preserving savings, cutting purchases, adding income, negotiating bills or using credit to manage cash flow. Those choices can reveal financial pressure that a salary or birth year alone may not capture.

At PYMNTS Intelligence, we work with businesses to uncover insights that fuel intelligent, data-driven discussions on changing customer expectations, a more connected economy and the strategic shifts necessary to achieve outcomes. With rigorous research methodologies and unwavering commitment to objective quality, we offer trusted data to grow your business. As our partner, you’ll have access to our diverse team of PhDs, researchers, data analysts, number crunchers, subject matter veterans and editorial experts.