The rising cost of living and the shifting landscape of work have left behind multiple victims behind in its rampage. New data shows that a growing number of Americans are living from paycheck to paycheck. On hearing this information, one might assume that the rise of “paycheck to paycheck living” is a problem for lower-income households, but it was revealed that a fifth of the households that earn more than $150,000 have found themselves stuck in this position.
Bank of America’s data on the paycheck situation was gathered from its study of anonymized US customer banking accounts and spending habits, providing us with insider information on the matter.
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A Growing Number of Americans Are Living Paycheck to Paycheck
According to the analysis conducted by the Bank of America Institute, around 26% of Americans have necessary expenses that account for over 95% of their take-home pay and 30% of households spend more than 90% of their income on immediate purchases of groceries and gas, or on bills, utilities, internet, housing, and child care. Compared to 2019, we are now witnessing a 10% increase in the number of Americans living paycheck to paycheck.
Around 35% of households earning less than $50,000 a year are living paycheck to paycheck, which makes them the largest income group to face this struggle. This number is up by 32% compared to the data from 2019.
Bankrate’s Financial Freedom Survey had painted a similar picture when it was released earlier in August. According to the survey, 75% of Americans felt they were not financially secure, and 30% expressed that they would likely never feel confident about their finances. More than 1 in 3 workers, or 34% of the Americans surveyed, admitted to living paycheck to paycheck. On average, Americans feel they need to earn over $186,000 to actually live conformably.
Wealthy Americans Also Admit to Facing the Paycheck Struggle
The rise in paycheck-to-paycheck living has been witnessed among a wider range of workers than ever before. Wealthy Americans are also faced with a paycheck struggle, with 20% of households earning $150,000 finding themselves in the same boat. Earning $150,000 or more has always served as an aspirational goalpost for most to work towards, but in the current economy, the struggles of living for the present with limited savings is something a large number of citizens face.
The rise has been attributed to the increased cost of housing with high mortgages, which drains a large amount of their resources, compounded by the issue of inflation. The housing costs remain a constant and unchanging area of expense for most households, making it difficult to move beyond its impact on how much of the monthly income can be saved after accounting for all of the payments.
The increase in the price of insurance premiums and credit card interest has also added to the expenses that individuals are expected to account for. Groceries are more expensive than before, so for the same standard of living that a family might be used to, their expenses are considerably higher.
“For some households, the rises in their incomes will have largely kept up with inflation, shielding them. But, for some people already living close to paycheck-to-paycheck, this may be less the case, meaning more get caught in the net,” David Tinsley, senior economist at the Bank of America Institute, told FOX Business.
The rise in households living from paycheck to paycheck has affected all generations of workers, with individuals from Gen Z to the Baby Boomers witnessing the struggle. People born before 1946 are seen as somewhat of an exception to this trend, but they account for a shrinking segment of the population.
Workers living with these pressures are constantly worried about finances and fear unexpected expenses that may tip the scales.
