Struggling Households Optimistic That Finances Will Improve This Year

Although PYMNTS latest research finds that 64% of U.S. consumers are living paycheck to paycheck, there is still optimism that things will get better.

This, according to findings in the December edition of “New Reality Check: The Paycheck-to-Paycheck Report: The Economic Outlook And Sentiment Edition, a PYMNTS and LendingClub collaboration, which found that 4 in 10 consumers said they expect their finances will improve this year, an increase of 7 percentage points from the 33% recorded in July 2022.

Part of that is coming from consumers not struggling to meet expenses already, 46% of whom expect incomes to keep pace with inflation, and 30% of that group seeing an overall improvement in their financial situation in the same time frame.

Those with the highest incomes (over $100,000) are the most expectant about improving personal financial conditions. However, that’s down 4 percentage points from last July.

The study states that “paycheck-to-paycheck consumers are the most likely to cite job upgrades and additional sources of income as drivers of optimism. Approximately one-third of this group expect their financial situations to improve in 2023 due to the extra income. Interestingly, those struggling to pay their monthly bills are slightly more likely to be optimistic due to additional sources of income than those living without difficulty, at 33% versus 27%.”

Digging into the numbers, just over 1 in 5 (21.6%) of those living paycheck to paycheck with issues paying bills feel their incomes will surpass inflation in 2023, compared to 27% without issues paying bills, and 30.3% of those who do not live paycheck to paycheck at all.

Among those living paycheck to paycheck and struggling with expenses, nearly 33% believe they will find a source of additional income this year, and 27% of that group is expecting a promotion or other job upgrade to uplift their status.

All three groupings are statistically close in the belief that they will have less debt to service as this year progresses. Additionally, those living between checks and not struggling and those not living paycheck to paycheck at all think investment income will ease the cash crunch at 21.8% and 31.1%, respectively.

Get the study: New Reality Check: The Paycheck-to-Paycheck Report: The Economic Outlook And Sentiment Edition