What Does Living Paycheck to Paycheck Mean to Consumers? | MX Research (2024)

FAQs

What Does Living Paycheck to Paycheck Mean to Consumers? | MX Research? ›

More often, it's about being able to add to (or build) savings and funds for retirement. Here's how consumers break down the definition: 32% Able to pay bills each month but cannot add to my savings or retirement. 21% No savings set aside. 21% Unable to pay my monthly bills without my next paycheck.

Those living paycheck to paycheck devote their salaries predominantly to expenses. The phrase may also mean living with limited or no savings and refer to people who are at greater financial risk if they were suddenly unemployed or faced another financial emergency.

Living paycheck to paycheck can permeate all areas of your life, from spending decisions to mental health. On a practical level, it also makes it difficult or impossible to save for emergencies or major expenses like a car or home.

Key Findings

48% of people earning $100,000 or more annually and 36% earning $200,000 or more reported living paycheck to paycheck. Inflation, high cost of living and a lack of income are the most commonly cited reasons for financial struggles.

How you handle money. What does living paycheck to paycheck mean? Living paycheck to paycheck is an expression used to describe a situation when someone eagerly awaits their next paycheck to plan for the month's expenses.

High credit utilization ratio: A lack of savings may result in putting big expenses on a credit card. This can raise your credit utilization ratio, a factor that impacts your credit score. Late or missed payments: Depending on each paycheck to pay your bills may lead to late or missed payments.

How Many Americans Are Living Paycheck to Paycheck? A 2023 survey conducted by Payroll.org highlighted that 78% of Americans live paycheck to paycheck, a 6% increase from the previous year.

You're not alone. A majority of Americans (59 percent) report that they live paycheck to paycheck. Stressing about finances can go far beyond the wallet. It can seep into every aspect of your life and manifest itself as generalized anxiety, guilt, panic attacks, or trouble sleeping at night.

Even Americans earning six figures say they are living paycheck to paycheck—including people making over $200,000. Under inflation, even the wealthy report financial strain. Money, money, money, isn't even funny in a rich man's world.

More than half of Americans earning over $100,000 a year live paycheck to paycheck. So what's going on? Many experts point to a phenomenon called lifestyle inflation as one of the culprits. Lifestyle inflation, or lifestyle creep, is the pattern of spending a little more as a person's income increases.

What paycheck is considered rich? ›

Based on that figure, an annual income of $500,000 or more would make you rich. The Economic Policy Institute uses a different baseline to determine who constitutes the top 1% and the top 5%. For 2021, you're in the top 1% if you earn $819,324 or more each year.

"Elevated prices have largely persisted, which means that Americans continue to face affordability challenges on a range of things both necessary and discretionary, including homes, vehicles, car insurance, food, electricity and travel." Indeed, the rate of price increases for food has subsided.

Living paycheck to paycheck means you spend all your income on your monthly living expenses – like your rent or mortgage, utilities, groceries and transportation – and have little to no money left over.

The 50-30-20 budget rule states that you should spend up to 50% of your after-tax income on needs and obligations that you must have or must do. The remaining half should dedicate 20% to savings, leaving 30% to be spent on things you want but don't necessarily need.

Live on Less Than You Make and Save

That means living on less than you make—so you'll have money left over to save. The Bible talks about the importance of saving in Proverbs 21:20 (NIV84), which says, “In the house of the wise are stores of choice food and oil, but a foolish man devours all he has.”

Inflation, lack of savings and credit card debt

Among those who consider themselves to be living paycheck to paycheck, financial stressors vary.

Even Americans earning six figures say they are living paycheck to paycheck—including people making over $200,000. Under inflation, even the wealthy report financial strain. Money, money, money, isn't even funny in a rich man's world.

You're not alone. A majority of Americans (59 percent) report that they live paycheck to paycheck. Stressing about finances can go far beyond the wallet. It can seep into every aspect of your life and manifest itself as generalized anxiety, guilt, panic attacks, or trouble sleeping at night.