Survey: 64% of Americans Now Living Paycheck to Paycheck

[ExFlyBoy5]

From a survey of 2,600 adults.

At the start of 2022, 64% of the U.S. population was living paycheck to paycheck, up from 61% in December and just shy of the high of 65% in 2020, according to a LendingClub report.

“We are all seeing the cost of everything shooting up,” said Anuj Nayar, LendingClub’s financial health officer. However, paying more for gas and groceries is hitting households particularly hard, he said.

And this statistic...

Even among those earning six figures, 48% said they are now living paycheck to paycheck, up from 42% in December.

This one is probably the most surprising to me:

Research shows that among consumers who earn more than $100,000, 23% who live paycheck-to-paycheck and are struggling to pay their bills say they would not be able to pay a $400 emergency expense.

https://ir.lendingclub.com/news/new...than-first-reported-in-June-2021/default.aspx

 

[38Chevy454]

I believe it. Not going to get any better when (official) inflation is running at 7-8% range as it has been lately. Practical inflation is even higher since the drastic fuel price increases in past few weeks.

 

[disneysteve]

I believe it. Not going to get any better when (official) inflation is running at 7-8% range as it has been lately. Practical inflation is even higher

I love that term: practical inflation. It's so true. We keep hearing that inflation is 7%. Great. We ordered Chinese food the other night. Appetizers that had been $3 are now $4. That's a 33.3% increase. Entrees that had been $10 are now $12. That's a 20% increase. Lots of other examples of prices on things rising 20% or more. It's certainly been true at the grocery store.


60-70% living paycheck to paycheck seems to be what pretty much every survey has shown for years. LBYM just isn't the norm in this country, which is part of why folks like us get such strange reactions when we say we're retiring at 50 or 55 or even 60. That's not the reality that most people inhabit.

 

[ExFlyBoy5]

I do like the term "practical inflation" and as others have mentioned, there is "personal inflation." We don't drive very much, so the DIRECT increases in fuel cost doesn't affect us too much. Of course, we get a lot of stuff delivered, so there is (or will be) associated costs with that.

Our grocery costs have gone up quite a bit too; so far about an 18% increase compared to last year. It's hard to parse out though since I put Costco/Wal Mart/Etc in that category.

My DW has fielded quite a few calls from her RE agents who have to drive a lot as they are trying to figure out to save on gas with all the trips they have to make to properties.

 

[Chuckanut]

I believe it.

The other day I was talking to a 30-something who rents a place in my neighborhood. He told me wants to buy a house, but does not have the down payment. Later he told me that he just renewed his membership at a local golf club so he can play twice a week 'for free'. Later that same day I saw a door-dash type outfits delivering take out to his front door. Why he does not see the connection is beyond me.

 

[Midpack]

A sad situation, but this doesn't help...

A little over 55% of Americans do not use a budget to manage their hard-earned income, according to a new survey by The Penny Hoarder.

A similar 56% of survey respondents said they didn’t know how much money they spent last month.

But there’s a good case to be made for tracking your money. The survey of 1,900 Americans conducted in May also found that those who kept a budget were more likely to know how much they spent last month and were less likely to say they had splurged on something that hindered their ability to pay bills.

While following a budget can help people keep tabs on their spending and reach financial goals, many Americans simply don’t think it’s necessary. At least that’s what half (51%) of those who said they did not budget gave as their reason.

Nineteen percent said they didn’t budget because they didn’t have the time or energy and another 19% chalked it up to lack of organization.

https://www.thepennyhoarder.com/budgeting/budgeting-statistics/

 

[Car-Guy]

I guess you could say I'm living paycheck to paycheck too... The only check I get is my monthly SS check...... It's been that way for a decade now... With that I can fill my truck with gas and have enough left over to stop by McDonalds and get a Big Mac (w/o cheese). A slight exaggeration but you get the idea and at this rate, it be accurate in another year or so.

 

[ExFlyBoy5]

A sad situation, but this doesn't help...


https://www.thepennyhoarder.com/budgeting/budgeting-statistics/

Nineteen percent said they didn’t budget because they didn’t have the time or energy and another 19% chalked it up to lack of organization.

I wonder how much time the "19% have no time to do a budget" spends farting around on social media or watching TV?

 

[Montecfo]

Yes, a lot of opportunistic price increases now. Won't shake out till economy opens up more and gas normalizes.

 

[badatmath]

My only budget is being too cheap to spend money mostly but it seems to work for me.

 

[pacergal]

I have to admit, when we were younger, we frequently lived paycheck to paycheck--spending what was our checking account every month.
However, we had our savings taken out of our paycheck before it hit our checking! Remember the old credit union "Christmas Savings Fund plan, taking some out each month so you would have enough for the holiday gifts?" That was the start of our married LBYM plan. Later, Direct Deposit made it so much easier to send monies where we wanted it to go before it hit our checking account!

 

[Qs Laptop]

With that I can fill my truck with gas and have enough left over to stop by McDonalds and get a Big Mac (w/o cheese). A slight exaggeration but you get the idea and at this rate, it be accurate in another year or so.

I had a real eye-opener recently. I hadn't been to McDonald's since before the pandemic started, so late 2019 or early 2020. My usual takeaway at McD's is a McDouble and small fries, which cost $3.23. I went to McD's two weeks ago and got my usual, McDouble and small fries--and it was $5.14.

An increase of 59% in two years!

 

[Car-Guy]

^^^^^ No worries, it's transitory.. When we stop by McDonalds these days it costs the DW and I about $20.

 

[Chuckanut]

I had a real eye-opener recently. I hadn't been to McDonald's since before the pandemic started, so late 2019 or early 2020. My usual takeaway at McD's is a McDouble and small fries, which cost $3.23. I went to McD's two weeks ago and got my usual, McDouble and small fries--and it was $5.14.

An increase of 59% in two years!

And they have really shrunk their dollar menu. On many items it's now buy one at the regular price, get a second item for $1.

Thankfully, the coffee is still reasonable and descent. I never buy alcohol at McDonalds. First it really drives up the cost, and, second, I have to go outside to the back of the store near the dumpster to find the guy who sells it.

Local McDonalds in my area now routinely advertises wages of $15 an hour and up. The Chik-Fil-A (sp?) is offering $17+ an hour. I don't begrudge them that wage because this is a high COL area to live in. I can't expect the guy who serves me a burger and fries to live in a tent on a vacant lot just so I can pay $3 for a burger, fries and coffee.

 

[Midpack]

I have to admit, when we were younger, we frequently lived paycheck to paycheck--spending what was our checking account every month.
However, we had our savings taken out of our paycheck before it hit our checking! Remember the old credit union "Christmas Savings Fund plan, taking some out each month so you would have enough for the holiday gifts?" That was the start of our married LBYM plan. Later, Direct Deposit made it so much easier to send monies where we wanted it to go before it hit our checking account!

Apologies for the tangent but I look back at my very early spending "philosophy" and it makes me laugh. For my first few years out of college I saved money - if my savings reached $4000, I was entitled to spend up to $2000. So my savings bounced between $2000 and $4000 by design. I grew out of that by age 25, but I'm amazed at how stupid I was...

 

[Amethyst]

He'd like to own a house, but it's not that high a priority for him. Or he may not be willing to settle for the home that he could afford.

The delivery service is because he values convenience over shopping and preparing food.

The golf membership is because he values socializing. He probably surmises that connections made on the golf course could help him get ahead, whereas nobody at work much cares whether he owns his house or rents.

It is like the town house community where we used to own a rental. The town houses went for $250K or so, but the parking lot was full of new, high-end vehicles. We owned a $750K house, and drove a well-maintained older car worth about $5000. For us, where we lived was more important than what others saw us driving. The town house residents' outlook was different.

I believe it.

The other day I was talking to a 30-something who rents a place in my neighborhood. He told me wants to buy a house, but does not have the down payment. Later he told me that he just renewed his membership at a local golf club so he can play twice a week 'for free'. Later that same day I saw a door-dash type outfits delivering take out to his front door. Why he does not see the connection is beyond me.

 

[disneysteve]

When we stop by McDonalds these days it costs the DW and I about $20.

The folks I work with order out for lunch pretty much every day. I know they've got to be spending a bare minimum of $10/day. I have no idea how they manage it seeing as I earn in the neighborhood of 8 times as much as they do and I pack a PB&J sandwich for my lunch.

 

[Gumby]

I always packed my own lunch. Usually leftovers from the night before. My old battered aluminum lunchbox was famous in my office.

 

[Music Lover]

I believe it.

The other day I was talking to a 30-something who rents a place in my neighborhood. He told me wants to buy a house, but does not have the down payment. Later he told me that he just renewed his membership at a local golf club so he can play twice a week 'for free'. Later that same day I saw a door-dash type outfits delivering take out to his front door. Why he does not see the connection is beyond me.

Obviously, he knows that he's not playing golf for free. But a golf membership is a fixed cost that's probably paid upfront. You can play as often as you want for the entire season with no additional outlay...although most people do spend at the restaurant and for the occasional beer on the course. And if he's walking then he's getting some exercise, plus he's probably made a few new friends at the course and expanded his social network. Unless it's a high end expensive course, I don't see a golf membership as a waste of money for those who enjoy playing. Everyone needs some sort of hobby.

 

[kgtest]

I literally just had a discussion about living "paycheck to paycheck" with a longtime friend of mine, best man in my wedding. He came to MN to help his sister move her apartment and I offered up my truck, trailer and muscle to help get it done. As we were driving the topic came up and he said he and his girlfriend are living paycheck to paycheck. They have a household income of around $150k and live in California.

My wife and I have a household income over 250k so we don't wall in this category by any means...but I kind of explained that in terms of paycheck to paycheck we don't have much cash laying around if something did happen. The main reason being that we put so much into our 401k, IRA, HSA, and kids 529 and a little into broker. I said sure, if something dire happened I could take a 401k loan, or sell some equities in the broker account. He mentioned my definition and his were a bit different. He isn't saving much for the future and said for the first time in a loooong time he has about $2,000 in his checking, but it is more like $1,000 after all the bills are paid.

They never cook food. That was another topic that came up. He insisted on paying for a couple of things when he was visiting, mainly because I let him stay at our home. It was hard for me to accept anything knowing his situation, maybe guilt or shame on my end. He insisted. He donated $40 to my son's cub scouts activities, and filled up the tank of diesel insisting that when one man helps another man move, its just the right thing to do. It was hard for me to argue, but also I know our financial situation is much better and it wouldn't nearly make a dent in my budget compared to his.

He pays well over $5/gallon for gas, and I live in the midwest where gas has probably never been over $5/gallon. On top of that, I rarely drive these days so it wasn't a big deal to just use some gas to help someone move. BUT he insisted. I finally put an end to his generosity when he tried to pay for both my son and I's dinner the night we finished the move. His sister had given me $130 cash as a thank you for all my hard work (and I did do lots of hard work), so I felt that was fair. Then he tried to also pay for both our dinner's and I said "look, my son, he didn't do anything to help you...he is just here with us eating dinner and I threw down my card and said it's on me this time!"

He has never earned a lot comparatively, but his girlfriend does. At 40, he accepted a hand me down car from his folks. I keep trying to nudge him into the IT industry, but a guy is ultimately going to make his own choices.

One thing I noticed with him and even his sister is they have been very conservative with the risks they take compared to the risks I have taken in my life.

I guess, I am just super grateful I am in the smaller piece of this pie but do feel for the folks who are in the 64%. It's only getting harder with this rampant inflation which means less food, less activity and lesser quality of life.

I often wonder how many of these folks driving around these big expensive SUVs and really nice new sedan's are actually in that same 64% paycheck to paycheck group. It seems we as a society (likely not too many in this forum) tend to over leverage ourselves with interest bearing loans and unnecessary fees. I always enjoy when I get a deal on things and almost try to make a game of it. Never pay retail. Go without if I can. Repurpose things. I do borrow things from my folks like tools etc since they have already bought it, it doesn't make sense for me to buy something they can loan me. One of the perks to living close to ma and pa I guess. I just borrowed some moving sliders, straps and a dolly to help with the move so the friends wouldn't have to rent them. SO I guess in a sense I did earn my $130 which makes me feel slightly better.

Everything has gotten so much more expensive with inflation, its crazy.

 

[kgtest]

I always packed my own lunch. Usually leftovers from the night before. My old battered aluminum lunchbox was famous in my office.

Classic. My ole man just threw his in his brown briefcase with the locks lol. The thing is a legend and I was always amazed how much crap he could fit in it.


He still has it and he has been retired for at least 6 years. If I ever go into the office again, maybe I will tote it in one day.

 

[brett]

The consumer credit stats tell part of the story.

Lots of people spending money they do not have on 'wants' instead of 'needs'. Many live in a minimum monthly payment world. That minimum monthly payment tends to grow over time.

Worse still....the increase in consumer credit in the age group that is approaching retirement.

 

[prudent_one]

Obviously, he knows that he's not playing golf for free. But a golf membership is a fixed cost that's probably paid upfront. You can play as often as you want for the entire season with no additional outlay...although most people do spend at the restaurant and for the occasional beer on the course.

I'm not a golfer but the ones I know have a minimum amount they must spend in the restaurant monthly. If they don't spend that much, the club charges the difference anyway. So if the minimum is $200/month, and someone only spent $150, they get billed $50 at the end of the month.

 

[Music Lover]

I'm not a golfer but the ones I know have a minimum amount they must spend in the restaurant monthly. If they don't spend that much, the club charges the difference anyway. So if the minimum is $200/month, and someone only spent $150, they get billed $50 at the end of the month.

A lot of the courses around here have that but it's not normally a big deal for most people as they'll easily spend that much anyway. Dinner and a drink after the round every now and then. Or you can get something from the snack shack or beverage cart during the round.

 

[disneysteve]

I often wonder how many of these folks driving around these big expensive SUVs and really nice new sedan's are actually in that same 64% paycheck to paycheck group.

Lots of them. Statistically, the higher the price of the car, the more likely it is to be leased, not owned. About 1/3 of all new car transactions are leases. About 68% of all leases are for luxury vehicles.


People base their decision on whether or not they can "afford" the monthly payment, not if they can actually afford the vehicle.


This also is seen in the fact that the average car loan, new or used, is now 72 months. So even most people buying their cars are overextending themselves to get what they want, not what they can really afford.