Paycheck-to-Paycheck: U.S. Consumers Struggle to Save, Manage Expenses

financial struggle© People Image / Getty Images Signature / Canva

According to a recent study, the average U.S. consumer is living paycheck to paycheck, struggling to save and manage expenses. The study, conducted by LendingClub Corporation in partnership with PYMNTS.com, found that most consumers are unable to save money due to financial stressors such as debt, low wages and high costs of living. This can have a major impact on their ability to manage everyday expenses and put aside money for the future.

According to the study, a significant number of Americans are living paycheck to paycheck. The study, which was conducted by Personal Capital, found that 61% of respondents were in this situation as of June 2022. This represents a substantial increase from the 52% who reported being in this situation in April 2021 and the 55% who said they were living paycheck to paycheck in June 2021.

The LendingClub study also found that the average savings dropped $517 from $11,724 in May 2022 to $10,757 in June 2022. This is likely due, at least in part, to the fact that more people are struggling to make ends meet. The study also found that the biggest rise in paycheck-to-paycheck consumers was among those earning between $100,000 and $150,000. In May 2022, 41% of respondents in this income bracket said they were living paycheck to paycheck. This figure rose to 52% in June 2022.

These findings suggest that many Americans are struggling to keep up with their expenses, even if they are earning a relatively good wage. This is likely due to a number of factors, including rising costs of living and stagnant wages. It is also worth noting that an estimated 33.5 million — or 13% — of U.S. consumers spent more than they earned in the past six months. This suggests that financial insecurity is widespread in the United States.

In just one year, the American economy has made a complete turnaround. Last summer, we were all worried about how the economy would recover from the recession. However, now inflation is on the rise, and consumers are finding it difficult to keep up with their spending habits.

According to Anuj Nayar, LendingClub’s Financial Health Officer, “That said, consumers are not yet slowing down their spending habits, despite the rise in the cost of living. Not only is it going to be difficult for them to handle future emergency expenses, but even foreseen payments like education, student loans, or housing expenses may be harder to balance for the everyday American consumer.”

As the cost of living continues to increase, it will become more and more difficult for Americans to maintain their current standard of living. We can only hope that the economy will continue to improve so that we can all enjoy a better quality of life.

READ:  Pennsylvania to Lead Multistate Lawsuit Against Mariner Finance

Living Paycheck-to-Paycheck: A Growing Trend Among High-Income Families

paycheck
© Andrey Popov / Getty Images / Canva

Living paycheck to paycheck is the most common financial lifestyle in the United States, with increasing numbers of high-income consumers now living paycheck to paycheck. In June 2022, 61% of Americans were living paycheck to paycheck, up from a low of 52% in April 2021 and 55% in June 2021.

This means that more than half of all Americans are not able to cover their basic expenses for even one month if they were to lose their job or have an unexpected emergency expense. The causes of this financial insecurity are many and varied, but include stagnant wages, rising costs of living, and increasing levels of debt.

The ongoing pandemic has been financially devastating for many Americans, and the new data shows that even those in the highest income brackets are struggling to make ends meet. The biggest increase in the share of people living paycheck to paycheck was seen among those earning between $100,000 and $150,000, with the percentage rising from 35% in May to 52% just one month later. For those in the $150,000-$200,000 bracket, the proportion rose from 41% to 47%. Even those earning more than $200,000 are not immune from financial difficulties, with 36% living paycheck to paycheck in June 2022, up from 30% in May.

This trend is extremely worrying as it shows that even those who are relatively well-off are struggling to keep up with their expenses. With the pandemic continuing to rage on and unemployment levels still high, it is likely that this trend will continue in the coming months. Whatever the cause, the result is the same: millions of American families struggling to make ends meet.

The good news is that there are steps that can be taken to reduce the number of people living paycheck to paycheck. These include creating an emergency fund, cutting unnecessary expenses, and seeking out financial counseling. By taking these steps, we can help put an end to the cycle of financial insecurity.

33.5 Million U.S. Consumers Spend More Than They Earned in the Past 6 Months

spending
© NY59 / Getty Images Signature / Canva

According to the LendingClub report, an estimated 33.5 million Americans are living paycheck to paycheck. This is a significant increase from previous years, and it indicates that many people are struggling to make ends meet. The report also found that the average savings account balance has decreased, which suggests that inflation is having a negative impact on people’s ability to save money.

READ:  American Attitudes About Housing Hit 10-Year Low: Prospective Home Buyers and Sellers Back Off from U.S. Housing Market

Paycheck-to-paycheck consumers are typically more concerned with easy access to funds than with earning a higher return on their investment. As a result, they tend to keep most of their money in banks, digital wallets, or cash. However, high-income consumers are more likely to invest in diversified portfolios, indicating that they have greater financial stability.

When it comes to saving money, there are a number of different options available to consumers. The average consumer has half of their available savings stored in a bank or digital wallet such as PayPal or Venmo. The average consumer also keeps 11% of their savings in either stocks or bonds, and 20% in education or retirement accounts.

Meanwhile, consumers in the highest income bracket allocate an average of 58% of their savings to assets other than cash or funds in a financial institution. Consumers earning more than $200,000 per year invested 28% of their available savings in stocks and bonds, while consumers earning between $100,000 and $200,000 invested 14% of their available savings in stocks and bonds.

While there is no one right way to save money, it is important to consider all of your options before making a decision. Each type of savings account has its own benefits and drawbacks, so it is important to choose the option that best suits your individual needs.

Regardless, when it comes to saving money, the most important factor for many consumers is ease of access to their cash. According to the survey, 46% of respondents said that having quick access to their savings was the most important factor in choosing how to store their money. This preference for easily accessible savings is especially common among lower-income consumers and those who live paycheck-to-paycheck.

While quick access is often the primary concern for these groups, high-income consumers are more likely to prioritize diversification when it comes to their savings. 31% of respondents who earn more than $200,000 per year said that having a diversified portfolio was the most important reason for choosing how they store their savings. By contrast, only 8.7% of those earning less than $50,000 per year said that diversification was a top priority.

This difference may be due to the fact that high-income consumers are more likely to have the financial resources to cover unexpected expenses without having to dip into their savings. For lower-income consumers, on the other hand, being able to access their cash quickly may be a matter of financial survival.

READ:  Pennsylvania to Lead Multistate Lawsuit Against Mariner Finance

Nevertheless, the findings of this report highlight the need for more financial education and support for Americans who are struggling to make ends meet. With the cost of living rising and wages stagnating, it is becoming increasingly difficult for people to save money. However, by learning how to budget and invest properly, people can take control of their finances and build a more secure future.

The cycle of financial insecurity is one that can be broken. By creating an emergency fund, cutting unnecessary expenses, and seeking out financial counseling, we can work to put an end to this problem. These are important steps that everyone should take in order to improve their financial security. If you’re looking for more information on personal finance, be sure to check out our other articles on the topic.

You can view the full LendingClub report by visiting www.pymnts.com.

Methodology

LendingClub states that The Paycheck-To-Paycheck Report: The Consumer Savings Edition is based on a survey of 3,583 U.S. consumers conducted from June 8 to June 27. The aim of the Paycheck-To-Paycheck series is to provide a more detailed look into the finances of the American consumer, including income, savings, debt and spending choices. The data published by government agencies such as the Federal Reserve System and the Bureau of Labor Statistics was used as a starting point for the Paycheck-To-Paycheck series. Our sample was balanced to match the U.S. adult population in terms of key demographic variables: 51% of respondents identified as female, 31% were college-educated and 35% declared incomes of over $100,000 per year. The resulting report offers a comprehensive view of the financial state of the American consumer.

You May Also Be Interested In…

Thanks for visiting! Looking for some Chester County pride? We got you covered! Shop our MyChesCo store and show your love for Chester County, Pennsylvania. We got shirts, hats, and more – all with a unique ChesCo flair. Plus, proceeds from each purchase helps support our mission of bringing reliable information and resources to the people of Chester County.