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Majority of People You Know Are Living Paycheck-to-Paycheck

New findings from LendingClub paint a picture of people sliding back into just getting by financially.

61% or 203 Million Americans are Living Paycheck To Paycheck, Up from 55% a Year Ago.

At the same time, the average savings amount dropped to $10,757 in June 2022.

People are wandering more towards the financial edge despite high employment.

Part of the issue has been the return to the office rather than working from home. Commuting costs are way up while the oil companies announce record profits.

Additionally, the stimulus payments were a big help to families, but those are long gone now as well.

An estimated 33.5 million — or 13% — of U.S. consumers spent more than they earned in the past six months. It will get worse.

The low and middle class is not alone in this trend. The highest income brackets have experienced significant upswings in the share living paycheck to paycheck from May to June 2022.

The biggest rise in paycheck-to-paycheck consumers was for those earning between $100,000 and $150,000, up 11 percentage points since May 2022 to 52%.

Forty-one percent of those earning between $150,000 and $200,000 annually lived paycheck to paycheck in June 2022, up six percentage points from 35% in May.

Furthermore, the share of consumers earning more than $200,000 who lived paycheck to paycheck rose 6 percentage points from 30% in May to 36% in June 2022.

Income is not an indicator of financial health. Typically people expand spending to fit their income.

The results of the survey are fascinating in how people hold their savings.

When choosing how to save, the average consumer has half of their available savings stored in a bank or digital wallets 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.

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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 some cite inflation as the primary reason for the paycheck-to-paycheck reality, we also have to look at wage growth. While it has increased recently, it has been declining for decades now.

Majority of People You Know Are Living Paycheck-to-Paycheck

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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