Thomasville Times

More people living paycheck to paycheck



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Inflation is ripping apart the fabric of American life. This is underscored by the growing number of American consumers who are spending all they earn each pay period on living expenses. They rely on the next paycheck to meet their financial obligations. Sixty-three percent of consumers fall into this category. And during the past year, surprisingly, this has become a reality among individuals earning more than $100,000 per year. These findings were reported in the December 2022 survey conducted by Lending Club and pymnts.com.

As one would expect, all income brackets have been affected by the crunch of higher prices and rising interest rates. But a recent development has been those with incomes greater than $100,000 now living paycheck to paycheck. More than half, 51 percent, reported living in this fashion. This is up from 42 percent during the same period in 2021.

Among middle-income consumers earning $50,000 to 100,000 annually, 66 percent are living paycheck to paycheck, unchanged from one year earlier. But among low-income individuals — those earning less than $50,000 annually — the number jumps to 78 percent, which is also constant from December 2021.

In addition to living from paycheck to paycheck, many consumers are living on the razor’s edge. They are struggling mightily to pay their monthly bills. Almost one in four (24 percent) reported they were having difficulty covering their monthly bills. This is up from 22 percent a year earlier. Significantly, 16 percent of those earning more than $100,000 were struggling to pay their bills.

As might be expected, many of those living paycheck to paycheck have to rely on credit cards or personal loans to cover their monthly expenditures. Forty-eight percent of those who are struggling to pay their bills had to use credit cards. Twenty-one percent had to have personal loans. And, unfortunately, both come with high-interest rates, placing an additional burden on consumers.

Finally, people who live paycheck to paycheck find it difficult, if not impossible, to do any financial planning — neither short or long-term.

More than half (57 percent) of those who struggle to pay bills have no defined short-or long-term goals.

What does the future hold? Expect more people of all income levels to live paycheck to paycheck. This will continue until inflation subsides and the economy stabilizes.

In the meantime, review your spending with an eye toward eliminating nonessential items and try to build up some savings as a cushion against unexpected circumstances.

Wayne Curtis, former superintendent of Alabama banks, is a retired Troy University business school dean. Email him at wccurtis39 @gmail.com.

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