Data Highlights the Divide Between ‘Choice’ and ‘No Choice’ for Paycheck-to-Paycheck Consumers

For much of the past decade, “living paycheck to paycheck” has functioned as shorthand for low wages. PYMNTS Intelligence’s research this year suggests something more complicated: a broadening spectrum of financial fragility that increasingly reaches into the middle—and, at times, higher-income—tiers.

Across the monthly 2025 installments of New Reality Check: The Paycheck-to-Paycheck Report, the top-line share of consumers living paycheck to paycheck moved within a narrow band—usually the mid-60% range, with spikes toward 70%. But the more consequential shift happened beneath the headline: the balance moved away from “choice” (spending-driven) paycheck-to-paycheck living and toward “necessity” (income- and cost-structure-driven) fragility.

The year started with bills rising—and reactive behavior following Spring: price sensitivity met tariff uncertainty, and the “stable 65%” hid churn underneath.

The early-year story was not about discretionary splurges as much as unavoidable line items. In the January installment (fielded in December 2024), 65% of consumers lived paycheck to paycheck, and 78% reported at least one bill increase over the prior year—most commonly electricity, insurance and gas. Struggling paycheck-to-paycheck consumers reported taking nearly twice as many “actions” to manage those increases as financially stable households, underscoring a pattern that recurred all year: when liquidity is thin, behavior becomes tactical and short-term.

February’s report introduced a theme that would later reappear in discussions of housing and credit: tradeoffs framed as “time versus money.” As of January, 67% lived paycheck to paycheck, and the report linked convenience-service usage to income and lifestyle—highlighting how even higher earners can drift into paycheck-to-paycheck living when recurring, frictionless spending accumulates.

By April, the share living paycheck to paycheck was described as stable at 65% through the first three months of 2025, but stability at the aggregate level masked stress at the margin. Roughly 22% of all consumers were paycheck to paycheck and struggling to pay bills, and the research quantified a practical “tipping point” for demand destruction: nearly 52 million consumers said they would stop buying certain goods or services after a 10% price increase. The implication for merchants and lenders was clear: households were increasingly operating with hard thresholds, not soft preferences.

By May, supplemental income had shifted from a niche tactic to a mainstream feature of household cash flow. Forty-one percent of consumers reported earning money outside traditional employment, and side hustles represented an average of 43% of total income among those who had them. The report also pegged 68% of consumers as living paycheck to paycheck as of April—suggesting that even when consumers add income, they are often doing so to keep pace with higher baseline costs, not to build durable buffers.

June’s installment took aim at a paradox: consumers say they want budgeting help, but many do not use the tools available. PYMNTS Intelligence’s Paycheck-to-Paycheck index hit 68.4% in May, and the share struggling to pay bills rose to 24.2%. The report found that advanced budgeting tools correlated with greater reported financial comfort among those having trouble making ends meet—yet those tools remained underutilized, reinforcing a broader theme of the year: the solutions that could improve resilience are not necessarily the ones consumers consistently adopt.

July’s report framed homeownership as a driver of paycheck-to-paycheck living, not merely a victim of it. More than two-thirds of consumers lived paycheck to paycheck, and 14% cited the financial strain of buying a home as a key reason for their condition—translating into tens of millions of consumers accepting reduced liquidity in exchange for owning a home. The report also positioned buy now, pay later (BNPL) less as a distress signal and more as a budgeting tool for some homeowners, especially those whose cash flow is dominated by mortgage obligations.

The throughline here was important for financial services firms: the household “budget” is increasingly shaped by structural commitments (housing, utilities, insurance) rather than discretionary choices alone.

August’s installment challenged the assumption that paycheck-to-paycheck living is a fixed identity. It documented movement into and out of the lifestyle and highlighted “financial history” as a determinant of confidence and perceived mobility. More than half of paycheck-to-paycheck consumers reported having had savings to lean on at some point, but a meaningful share had been stuck since before July 2020—suggesting scarring effects from the pandemic era and subsequent inflation cycle.

September’s report made the liquidity problem concrete. In August 2025, 68% of Americans lived paycheck to paycheck, and 25% of those consumers struggled to pay monthly bills. Average liquid assets were reported at $9,869 overall, but just $2,336 for those struggling—a gap that helps explain why “emergency confidence” is so uneven. Fewer than half (48%) said they were very or extremely confident they could come up with $2,000 within 30 days, and only 15% of those struggling expressed that level of confidence.

October’s installment added a sentiment layer to the same financial reality: 26% reported difficulties paying their bills, and “nearly seven in 10” were living paycheck to paycheck. Consumers’ outlook tilted negative, with pessimists outnumbering optimists, and food and inflation ranked among the most-cited stressors.

The most revealing finding of the year arrived in November’s installment. The share living paycheck to paycheck dipped to 66% in October (from 69% the month before), but 42% of consumers said they were living paycheck to paycheck because they had “no other choice,” up sharply since August. The report tied this shift to income instability: six in 10 consumers earned primary income outside fixed salaries, and among those struggling to pay bills, more than seven in 10 relied on non-salaried work. In other words, fewer consumers may have been at the edge in that particular month, but more of those who were at the edge were there structurally, not behaviorally.

Recurring themes that defined the 2025 paycheck-to-paycheck consumer:

Liquidity is the real dividing line. The year repeatedly returned to “cash on hand” and the ability to handle a $2,000 shock as a practical test of stability.

Cost pressure broadened beyond “luxuries.” Bill inflation (utilities, insurance, gas) and housing costs drove coping behavior more consistently than discretionary pullbacks.

The economy became more “threshold-driven.” Price increases triggered categorical exits for millions of consumers, a meaningful signal for merchants, issuers and risk teams.

More households sought income patches. Side hustles expanded, but often functioned as gap-fillers rather than wealth-builders.

Tools exist, but adoption is uneven. Budgeting technology correlated with higher comfort—yet many consumers still don’t use it, even when they say they want help.

“Choice” gave way to “necessity.” The year ended with stronger evidence that income volatility—hourly, gig and contract work—was redefining financial precarity.

The arc of 2025 points to a paycheck-to-paycheck economy that is less about a single “struggling” segment and more about cash-flow volatility management at scale. Consumers did not uniformly regress; many adopted coping strategies (side income, budgeting tools, alternative credit structures). But the consumer who must live paycheck to paycheck grew more prominent as the year progressed, even when the aggregate rate briefly eased.

For institutions designing products, underwriting models and engagement strategies, the opportunity—and the risk—lies in recognizing that “paycheck to paycheck” is now a spectrum: from deliberate budget optimization to structural fragility tied to income type, housing burden and shrinking buffers.